Outlook 07/22: U.S. stock futures pulled back overnight following the diplomatic flare-up, which adds to concerns over the deteriorating relationship between the economic superpowers. President Trump already dimmed hopes of a Phase 2 trade deal earlier this month, saying the relationship with China had been too badly damaged by COVID-19. Investors are also questioning whether Congress will reach an agreement on the next coronavirus stimulus bill before lawmakers start their summer recess, while Trump warned the pandemic will probably "get worse before it gets better."
/ESU20 Value: YVAH 3269 YPOC 3264 YVAL 3255 GAP 3252
/ES Plan: Yesterday market closed bullish (PBT 3288), but overnight looks more balanced, moving below yesterday's value, so these are the initial balance options for today's opening:
A) If market remains below LIS HVE 3255 with bearish internals, sell towards HVE 3231 ONL 3227.25 and HVEs 3221-3207.
B) If market moves above LIS 3255 with bullish internals, buy towards ONH 3265.75 HVE 3280 PBT 3288 and HVE 3298.
Note: When the market opens below the value area and remains below the value area low on the subsequent tests, it is a clearly bearish signal. But when a market opens below the value area but then fails to go through the overnight low and begins to trade back into value with volume at highs increasing, it is a signal of reversal. There is a strong tendency to rotate all the way through the value area.
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