The market raced higher after the election and now it is giving those gains back.

PRE-OPEN MARKET COMMENTS TUESDAY – Biden has given the Ukraine permission to fire long-range missiles into Russia. This is going to pull the US further into the conflict and the market doesn’t like it. Without aide from the US, the Ukraine will have to negotiate a treaty and Trump has been vocal about not supporting this war. From a longer-term standpoint, I am not overly concerned with this development. On a short-term basis, it means we are going to probe deeper for that support level.

The big news this week will come after the close tomorrow when Nvdia reports earnings. That will impact the tech sector.

I’m bullish. Buy dips and sell rips. I would like to see the market find support at AVWAPQ. The 50-day MA is just below it. A drop to that level would be a reasonable pullback in the context of a longer-term up trend. When we find support, we want to see aggressive buying. I don’t know that we will get it today, but I would love a nice deep probe to $580 early in the day and then a big bounce with nice stacked green candles. That would result in a bullish hammer and I could get behind that. More importantly, Asset Managers could get behind that. They will buy dips, but they won’t chase a new market high. We don’t always get what we want, this would be the easiest pattern to trade. The key is that the bounce has to happen in the first couple of hours of the trading session and it has to come during a market drop.

Another scenario is that the market drifts lower and it eventually finds support. After a few days of poking at it, the market starts a gradual grind higher with lots of bid checks along the way. This type of tenuous move would indicate that buyers are not aggressive, they are moderately interested.

Europe was weak and Asia was strong. The crosscurrents overseas are not providing much clarity.

I’m comfortable with the longer-term swing trades we have on and I am looking to add once support is established.

From a day trading standpoint, I am not going to put much stock in the overnight drop. Putin has been rattling his sabers for years. Wars don’t have a lasting market impact and I feel this one is going to end soon. I feel that Asset Managers who have better information than I do might feel the same way. A couple of long consecutive green bodied candles that fill much of the overnight gap would be a sign that buyers are aggressive. If I see that, I would be buying dips early (starter positions). I would add on confirmation is we quickly erase more than half of the gap. I feel this scenario is fairly likely (35%). If the market can’t get into the gap in the first 30 minutes, we are going to drift lower in search of support. This will be a more stubborn and gradual decline than we saw Friday. We have to be patient and we have to wait for support. The earlier we get it, the greater the chances for a bounce that fills some of the gap. I feel this has a 35% chance of playing out. The drop from an all-time high can have excellent momentum because it catches many traders off guard and the move feeds on itself. We had that move Friday and the chances of a big nasty drop of 100 S&P points down to AVWAPQ is unlikely (15%).

Let’s see what the day brings. Support is at the low from Friday ($584) and resistance is at the high from Friday ($590).