Yesterday saw price formally stall, with a pickup in institutional selling volume as price reversed and closed on the lows. Then, our overnight cousins worked on pushing prices down and through the all-time high breakout area but could not get the job done. So the bearish daily action is balanced by some overnight bullish action, if ever so slightly. This left a short, squatty profile on the overnight chart. The 45-degree angle on the profile usually places the overnight low at 4456.50 as fairly secure.
Yesterday’s low was breached overnight, but we are slated to open inside yesterday’s range. Accordingly, I would use the overnight low at 4456.50 as today’s gateway to lower prices and confirm a greater pullback forming on the daily chart. The overnight high at 4576.75 gets the ball rolling northward, leaving the new, all-time high achieved yesterday at 4590 as the next milestone to conquer. Then there is the WEM high at 4594 and the roundie itself at 4600. Keep in mind that the market-makers will fight prices above the WEM high until options expire on Friday.
I don’t hear much chatter about next week’s Fed meeting yet, but it will arise soon. The big tech earnings are capturing most of the attention this week. 10-year rates have yet to break that important neckline we have been talking about, which would imply a doubling of the level from 1.6% to 3.2%. That will be good news if the pattern fails. But it is much too early to tell for sure.
There is not much to guide us at the open this morning, so I will be using the quartet strategy. I would not be surprised if we go sideways for a few days between 4600 and 4550. Some balancing would be a good segway into the Fed meeting early next week.
Stay tuned,
A.F. Thornton