Hello Everyone,
Tuesday Comments:
Following yesterday's reversal/bearish daily candles, we did see some downside follow through into the lower end of the recent range. The SPX has traded in a 100 point range for eight days and an even tighter range of late. Seasonally, this is the Summer Doldrums often characterized by lower volume and volatility. With that said, tomorrow we have the CPI report which could spurn some movement. Fundamentally, things are deteriorating with consumers struggling with inflation and certain companies beginning hiring freezes or layoffs. One thought, don't be overly upbeat if the CPI comes in below expectations as it's still extremely elevated and likely sticky. As always, continue to trade what's in front of you in conjunction with your plan.
Wednesday Comments:
As stated yesterday the SPX was COILED into into a tight range ahead of the CPI report - such consolidation always leads to expansion. And today it released energy with a large upside gap following the lower than expected inflation report. The SPX refused to break it's channel yesterday (held KEY support levels 4090-4110) which was foretelling a decent report. Thus, I postulated that the recent action may simply be a wave 4 (Flat) unfolding as a result price refusing to breakdown. This made sense since the move up to the prior highs 4168 counted best as 3 waves. The only way to overcome was a triangle and ending thrust but the price action remained sticky without a solid reversal breaking support.
After hours yesterday, I surmised a pop up (I was expecting some type of push higher) to potentially form a Right Shoulder but the morning gap took price above the previous highs right into a major resistance zone (4200-4210). I then focused on the intraday support that I posted for ES at 4170/75 which was tested and led to a bounce back up into the stated zone where it essentially traded the entire session. The SPX is now approaching my original target area 4220-4240 which also encompasses the 50% Fib retracement. Respect the trend until evidence changes.
Please take a moment to look at the trade ideas.
