Short-covering contained all week last week pushing the S&P 500, Nasday 100 and Russell into breakout mode, we could see a faster rally if they can stay above breakout mode.
The indices are in deep overbought zone on the daily chart. As such, once the short-covering is complete we could then see sharp reversal back down.
Key support for NQ is now at 26,300, for S&P 500 it is at 6,900 and for Russell it is at 2,700. Bullish above, bearish below.
The market rallied on Friday as a result of declining crude oil prices as market participants overwhelming believe that the middle east war is ending. However, the reality is different. The war is far from over and that crude oil price can spike back up at anytime.
The shooting is set to restart on Tuesday. What Trump decide can influence the market in a dramatic way and it is not possible to guess what that may be, however, key to market direction is the crude oil prices, WTI key price level for Monday will be at US$90,
Crude oil spiking above $90 will crash the market , below $90 could rally the market or just cause a sideways price action now that the equity market is already in extreme overbought on the daily chart..
Equity markets continued to rally on Tuesday and crude oil prices contused to sold-off on Tuesday pricing in a de-escalation of war between the american and Iranian.
If the situation continues on Wednesday we could see another rally in equity, although the equity market is already in deep overbought on the daily chart, and vulnerable to sharp sell-off.
NQ nest resistance is at 26,300.
Crude oil could continue to sell-off with WTI support level at 80 to 82.
Gold is pulling back down to support at 4,800, dropping from below strong resistance at 5,000.
Ahead of President Trump deal deadline with Iran, Tuesday evening, we could see crude oil price staying at elevated level which is bearish for the stock market.
With all major indices setting up a bullish pattern on the daily chart timeframe, as long as crude oil price does not spike, we could se a bullish day for the stock market on Monday.
A spike in crude oil price could cause the stock market to turn bearish.
Key resistance for NQ is 24,300, bullish above it, next resistance is at 24.800, and bearish below it.
