On a Wire
Back to hoping for a soft landing.
Image 1. Philippe Petit aka ‘Man on Wire’. At least he knew what he was doing.
Day Review
The European session pushed hard into 4500 at open, where responsive buyers were found. It is not uncommon to find interest at major levels, indeed levels of psychological weight react more often than not. Indeed it is up to the following context to gauge the strength of buying or selling activity.
The open at Friday’s POC was lackluster as buyers failed to follow through in a ‘look above and fail’ scenario. The prescient trader would then target the ONL, we ended with C period stopping just over two points of this level before sellers lost interest and buyers stepped in once again. The market rotated to traded back through open, however finding no traction above the opening range (OR). The remainder of the session was characterized by two-way trade, with selling effort into the close making a NLOD by a few ticks - leaving a poor low in the process. This will be an important reference for sellers into the next session.
Image 2. Look above and fail; buyer exhaustion at open
Image 3. ETH, RTH profiles.
We are now in four-day balance (Image 4), with neither side in control as we await further market generated information (MGI). This may come in the form of PMI Wednesday, or some direction from the host of Fed speakers on Thursday. Unemployment data is also coming up Friday. Perhaps the ‘big data point’ anticipated by all participants and officials is next week’s CPI, which will likely provide some direction into early fall.
Image 4. 4-day balance profile
Short-term and medium-term value are at 4517, with the 50D SMA below at 4494. Given the mechanical nature of the current market (indicative of very short-term traders), a test of the 50D may be in order where some initial buying may take place. Note also the ‘p-shape’ of the profile showing buyer absorption. Buyers will need to traverse value and meaningfully close above to retain hope for further upside price discovery.
But first a look a tomorrow below.
Tomorrow’s Missal
Plan is mostly unchanged. We could see some movement tomorrow on pre-market data. Buyers want to maintain above 4496 early on in the session. Sellers look to break 4470. Pivot 4509, the prior Tuesday high.
AAPL over 190 and TSLA above 260 could provide support to the indices. VIX under 13.57 would likely support the buyer case.
Buyer scenario. Defense of 4496 can lead to retest of 4521, with 4533 further above where sellers may step in. Ultimately buyers look to trade above 4543 for a shot at 4554. The buyer LIS is 4469, which could put last week’s attempt at a breakout in question.
Seller scenario. Sellers defending the afternoon high of 4517 would target the 4502 Tuesday poor low, with 4494 50D SMA below. A break of this can open a test of 4485 and 4470, where patient buyers are anticipated to step in. Sellers LIS 4533 which can induce short covering.
Notes. ISM PMI at 10EST may bring intraday volatility. Beige Book in the afternoon but this is not expected to give much impact to volatility.
Tip Jar - your support helps to keep my work going!
Don’t maintain bias in the face of contradicting information! Capital preservation is key.
This is not investment advice and I am not a qualified licensed investment advisor. All information found here, including any opinions, commentaries, and suggestions, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies. I will not and cannot be held liable for any actions you take as a result of anything you read here. As always, conduct your own due diligence, or consult a licensed financial advisor or broker before making any and all investment decisions. Any investments, trades, speculations, or decisions made on the basis of any information found on this site, expressed or implied herein, are committed at your own risk, financial or otherwise.