Afternoon Notes – 8/23/22

Good Afternoon:

• After a sharp rally and full retracement of the same following today’s Open, the market rotated around the Open for the rest of the day. The rotation is what we anticipated this morning. We referenced trading it as Responsive Trading.
• Interestingly, at the top of the rotation was the WEM low at 4145. With the market unable to find acceptance back inside the WEM range, I am concerned that the Dealers were bailing at the level rather than defending it.
• Failure to recapture the WEM range could be bearish for the next few sessions. Be careful.
• The market closed at the low, and very little occurred in the session to motivate a bull. The bears still have the upper hand momentarily.
• Back to plan, I indicated this morning and last week that we would potentially see a low-risk entry point at the highest volume node in the correction around 4120. Actually, 4120 give or take is not only the highest volume node but in Volume Profile Theory it is considered the fairest price of the year.
• Price tagged the 4120 level and slightly below overnight, breaching yesterday’s low. In fact, the overnight low was 4118. But the market could not drive back to the low in the regular session today. Perhaps that was the one bullish takeaway.
• As mentioned this morning, the market looks even more bearish below 4120, but there is bull thesis tolerance to the 50-day line at 3976 and the lower end of the Fib range at 3900.
• The 3976 and 3900 levels and the “Fib Buy Range” below could be tagged in a volatile reaction to Fed Policy Statements later this week, but be prepared for a quick turnaround back to the high volume node around 4120.
•  Any price acceptance below 3900, and defending the summer rally as a new bull market, would be downright embarrassing.