Debrief · 3 February 2023 · NFP Friday, in charts

Overnight, post Fed and NFPFollowing strong gains post a seemingly dovish FOMC, the market had already started to walk back some of its frothy gains after hitting sell-side supply at 4208, which was the high from 13th September. Friday's NFP data showed strong gains across all employment metrics, and with the Fed now more data dependent, markets reacted slightly negatively to the data.

Following the release, a fast liquidation move to 4132 (just below the FOMC close @ 4134.5) found buyers at the edge of the post-FOMC Globex lows at 4127.5. This was quite a muted reaction to some incredible and unexpected data. By the time the market opened buyers were already stepping in, perhaps buoyed by trapped positioning from the last few days' 3%+ rally.

A periodOpen 4140.5, a test back of less than a point, and then a grind up, seeing ON and post-NFP shorts get squeezed. Notably, sellers attempted to regain control at the ON POC (4169), but the chop back down was thwarted after repeated attempts to crack below 4148, where buyers remained resolute in B period.

C to H periodBuyers continued to squeeze the auction higher until we hit Thursday's POC and cash settle @4192 in C period. A brief look above 92s to 4194 (HOD) saw strong selling hit across most US indices (NQ selling was impressive at those levels), which happened to trade at their prior RTH settlement price at around the same time. Buyers seemed trapped and unable to overcome the strong offer, quickly giving up the earlier won gains.

I to M periodInto the close sell strength subsided, and the auction chopped around into the weekend after a final push to set the LOD at 4135, well below Thursday's range lows, to bring the auction back into balance.

Day typeNeutral day: both IB broken. Pivot 4164. OTFU daily and weekly, daily balance. H 4194, L 4135, VPOC 4147, mid 4164, VWAP 4162, settle 4147.75.

NFP week PA reviewThe week into NFP, in twelve steps:

1. Friday: late into the close, profit taking.
2. Sunday reopen: open (4077) below and test settlement. Fails to the downside. Stops cascade down into the EU session as longs liquidate.
3. Monday: ON inventory adjusts higher into the open. Buyers assert dominance early but fail to regain Friday's close. The auction stalls at 4078.
4. Tuesday: the ON sell-side imbalance continues to the downside but finds buyers located inside the singles area, just below the weekly POC and the 200DMA at 4006.
5. The shorts squeeze continues after the RTH open, with a late spike above last week's settle. This area above the Globex high (4048.5) would act as support following FOMC. Buyers manage to regain the prior week's settle, but only briefly. Balance into FOMC.
6. Dovish Fed and 25bp: an initial test down to the weekly 4050 pivot, revisited and broken by a couple of points a few minutes into the JPOW presser. A typical Fed whipsaw: responsive buyers found the 4050 area. One-way auction higher after that, with shorts squeezed and new money coming in, volumes increasing post FOMC.
7. The 4091 week's high is broken and the auction is in price discovery mode, accepting higher prices.
8. Sellers at the back-adjusted December high.
9. Price discovery continues higher until we hit a key prior high, 13 Sep 2022, to the tick. Profit taking into the close as we await earnings from Google, Amazon and Apple.
10. A double top following the earnings release: all a miss, no idea why we came back, but glad they revisited. Fast liquidation lower. NFP next.
11. NFP: a massive beat, all data pointing to a strong labour market. Sells off on stronger data, along with bonds and strength in DXY.
12. Sellers lurking at Thursday's POC and settle. Longs liquidate into the close.

Levels marked on the profile review, above and below. 4164 is the pivot; 4147 is last week's settle.

Sunday ON sessionAs outlined on the reopen and in this weekend's research, a backtest lower did indeed occur, and with relative ease. Interestingly, the ON low was set bang in the middle of our singles marker, just above the pre-FOMC balance highs.

Monitoring4147.5 / ON high retest, the ON POC at 4137 and Friday's VAL. A hold above last week's settle sees us grind back to test Thursday's high at 4194 and retest Thursday's double top at 4208.

To the downside, I'm watching for a test of 4090 and the FOMC POC @ 4080. On a break below, I will be expecting a retest of the FOMC lows at 4048.5.

PlanON inventory is short, so I am looking for an initial adjustment higher. I will trade according to what I see at the levels above, and not BEFORE!

Opening bell0830CT.

Notable tweetsWhat is the distinction between a reversal and a pullback? Pullbacks and reversals both involve price moving away from its highs or lows, but pullbacks are short-term and reversals are long-term. The pullbacks yesterday referenced some key levels to take trades from.