Despite the fact that private payrolls shed another 23k jobs which sparked a quick sell-off to the OL, negative sentiment was already in the cards overnight. Broad market volume deltas are favored more than 15% to the sell side and institutional orders are more than 40% sells. There was virtually no volume at offer under 68 all night and morning. Nice pop up in the 10s as well. The euro rally overnight is showing to be a little overcooked as well. We really think a test of interim support at the 58 handle is in the cards in the next day or so. The weak holiday volume may bleed off enough hanger on longs in the “free money trade” to get the downside flush. We reiterate though that we have no interest in selling under the OL at 62.75 as there is a giant cluster of support between 62 and 60. It will be an absolute grind through there and we will pass. If we do get into 59.50 though we will potentially sell into the test of the low which should be key at either 58/57/56.50. You have to be careful fading those though as any one of them may be the rejection. I will probably just scalp in on the first push to be on the safe side. Now that we sold off to a new OL at 62.75 we doubt we will fade it again as the probability to start the grind in the 60s is high. We would of course fade the OH at 69.75 on the right flow. If it does pop up we would gap fill trade from 67 long back into balance at 68.50 but I’m not crazy about it.
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