The ES made yet another new all time Globex session high at 2480.25 prior to Thursday’s regular trading session open, but sold off at the open after quickly trading one tick higher, setting the newest RTH record high at 2480.50. How long will this one last?
Price quickly reentered the prior two day balance, stalling at the very prominent point of control from Wednesday, and leaving an early poor A/B period low. First half hour NYSE trading volume was much higher at 506,245.
After revisiting the very prominent point of control from Wednesday at 2475.50, price traded above and below the two day balance high in 6 of the first 7 half hour periods, mechanically trading to a single tick below the open print in C, E and F periods before the sharp selloff in G accelerated through the two day balance low, and filled the gap from 7/24.
When price reenters a prior balance area, the odds are good that it could trade to the opposite end of that balance. Selling continued in H and I periods, trading through the previous two day balance from 7/21 and 7/24, filling the gap from 7/18 at 2458.50 before finding a bottom at 2457.00.
New Money Selling?
The selloff in G period, following a sharp selloff in Nasdaq after a slew of earnings reports, occurred after price failed to trade back through the open price a tick above the matching C, E and F period highs. Very mechanical.
The selling also did not result in an outside day, as price closed back within Wednesday’s narrow range, and the 16 point bounce off the excess low suggests the move was short covering following liquidation from shorter term, emotional trading money, and probably not new longer term money. And although volume was higher, NYSE daily volume ended the day at 3.8 billion, not terribly high considering the distance price traded compared to prior sessions. Also, the DOW ended the day positive.
All that said, Friday morning before the bell is the release of the second-quarter GDP, which is expected to bring significant volatility.
Generally, after a large selloff, the odds are good that a new balance could develop within the selloff range. On Friday, depending on where price opens, early focus could be on the double distributions.
Thursday’s late rally high at 2473.00 is questionable, as it was exactly at the prior day’s close. It is also the high of the lower distribution. Because of the mechanical nature of the rally high, price could retest that level, trading back into the single prints between the two distributions. If price finds acceptance above the single print at 2475.70 and into the upper distribution, the target would potentially be a test of the all time high at 2480.50.
If the market fails to trade above 2475.75, or fails to find acceptance back into the upper distribution, Thursday’s lower excess single prints and the low at 2457.00 are the potential targets.
If the market doesn’t like the GDP numbers and sells off, multiple daily lows below 2457.00 could become potential targets, including the prior weekly low at 2448.00. The remaining unfilled gap from July (7/11) is at 2427.25.
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