Bottom line for this week: The trade activity among the four US primary reading indices is as disparate as I can recall. There seems to be a macro “fight for the ages” in major institutions attempting to interpret and act based on Fed actions and perceived Fed rate policy guidance. Neither Big Seller nor Big Buyer has been able to wrest control of the market. Thus we are seeing wide day-to-day swings but no real directional conviction. The DOW/YM continues to be the poster child for the current chop and churn as it winds itself into an increasing mature and tight Balance Area. The denoument of all the current chop, churn and confusion will likely ultimately be quite a sharp multi-day directional move. It has been a difficult trading environment for stock index traders regardless of time frame. Be patient and selective. Daily KRAs: SPX The SPX (and other indices) became very two-sided following the January ramp higher. This is not a surprise. While not a nice, neat Balance Area, trade since the high has had a similar path and structure to that of typical Bakabce Areas – choppy and overlapping with sharp day-to-day reversals. A sharp, sustained move is increasingly likely. I don’t have a good feel whether it is likely to be up or down. NDX SPX comments also apply to the NDX. RUT The Russell displayed relative strength last week. Thursday’s high and Friday’s low are levels to watch on Tuesday. DOW No change: The DOW led the charge higher off the October low but has gone net nowhere since. It is mired in a Balance Area within a larger degree Balance Area. Here is the profile view of the increasingly mature multi-day Balance Area in the Dow within the context of the larger degree structure. Internals Internals are not much help at the moment. No point in going through all the ifs, and/or buts. Waiting for an extreme in the daily that will help clear up the 30m perspective. VIX continues to rotate around 20, not being able to sustain above it or below. Gold Gold may have put in a short-term low and at least Balance for a few days. Crude Consider favoring shorts against Friday’s high. US Dollar I don’t see an immediate good reward/risk trade. US 10-yr. Notes Notes are between well defined levels.
Trade Lesson and Pre-market Report for Tuesday, February 21, 2023
by Tom Alexander | Feb 19, 2023 | Uncategorized | 0 comments