Debrief · 16 September 2022 · OPEX and quad witching: profile and price-action review
Quad-witching OPEX to finish a week in which the S&P 500 lost 4.8%. Friday reopened with a gap below Thursday's range lows, found support at 3853 twice, and closed a normal variation day at the upper extreme, crucially without closing the gap. Plus the week in charts and a top tip on true open gaps.
The session
OvernightInto Friday's auction and quad witching, the auction was already pressing to the downside. The Friday ON reopen followed Thursday's RTH long liquidation session with a pertinent psychological gap below the daily range lows. Any hopes for trapped long positioning were dashed, and further ON liquidation pushed prices as low as 3862.
The openA shallow reversal ensued into the open, 3873.75, typical of such OPEX events. The open saw a tame push lower to reverse the pre-open swing higher, only to find support and buyers just above the ON low. A rotational open that saw sellers push as far as 3853. The auction rotated higher once more to test the opening high, taking out short stops, and ground out to 3892, the ON VAH: a break above the opening range, rare for an OPEX event this early in the session.
Mid-sessionA very choppy and unclear price action session, as OPEX hedges were met with opportunistic buyers at the mid-century. Once more, support was found at 3853. Sellers failed to break new ground.
The closeParticipants began to cover into the close, trending as high as 3895 to close. Post settlement, buyers searching for liquidity pushed price as high as 3902.5, BUT crucially failed to close the gap.
Day typeA balanced profile: a normal variation day, closing at the upper extreme.
The weekA balanced Monday, waiting for CPI data. CPI Tuesday: an open gap and post-data liquidation, a selling imbalance, then the trend lower as a liquidity search. A consolidation balance followed, and on Friday another selling imbalance gap into a second consolidation balance.
Levels into the next session
4-day balance: buyers will want to get the auction back inside the range, and sellers will be looking to defend 3905.
Data and news
FinancialJuice reported:
- UMich September US prelim consumer sentiment 59.5 vs 60.0 expected.
- Putin says the main goal is to liberate the Donbas region and 'we are not in a hurry'.
- CNN: China's Xi has told the military he wants China to have the capability to take Taiwan by 2027.
- UK planning to cut business energy rates in half.
- The Baker Hughes oil rig count moves up 8 in the current week.
- Canadian July wholesale trade -0.6% vs -0.6% expected.
- Saudi Arabia and Russia see $100 as a fair price for oil: report.
- Canada August housing starts 267.4K vs 265.0K expected.
- Eurozone core CPI final MoM (Aug): actual 0.7%, previous 0.2%, forecast 0.6%.
- UK retail sales MoM (Aug): actual -1.6%, previous 0.3%, forecast -0.5%.
Markets
- WTI crude oil up $0.21 to $85.30.
- US 10-year yields down 1 bps to 3.45%.
- Gold up $10 to $1673.
- S&P 500 down 28 points to 3873, or 0.7%; down 4.8% on the week.
Key lessons
Quote of the day
I learned that if you work hard and creatively, you can have just about anything you want, but not everything you want. Maturity is the ability to reject good alternatives in order to pursue even better ones.
It is far more common for people to allow ego to stand in the way of learning.
Trade well and prosper.
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