Week review · w/c 6 February 2023 · Out of the multi-month balance and into the September high

TakeawaysSunday reopened below Friday's settle, retested it, and liquidated. Notice that the FOMC low was Tuesday's Globex high and the post-open zipper low: 4048.5. I also liked Friday's late liquidation into the close, after buyers failed to hold above Thursday's POC and settle.

The week in twelve notes

1. Friday: late into the close, profit taking.
2. Sunday reopen: open (4077) below and test settlement. Fails to the downside. Longs liquidate, and stops cascade down into the EU session.
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 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.

How I review the weekReview the week's RTH before you look at the profiles. Can you see where the price action reverses? Can you identify where price becomes stuck? Look at the overlapping profiles. Does this help? Look at last week's references, and look at the shape of the daily profiles.

DailyThe daily charts see us return to test the high from Sep 13 2022, the 50% retracement from the Jan 2022 highs to the Oct lows. Quite amazing where that high got left. A drop below Friday's low early in the week may see some back-testing lower before we make another attempt at higher prices. Notice the volume increasing (everyone loading up), which tends to mark highs and lows. Have we reached a crescendo yet? It looks close, I think.

WeeklyLast week saw us break out of a multi-month balance following a dovish FOMC meeting, and we're now OTFU. The auction catapulted above the December CPI tail highs to find sellers lurking at the September 13th high of 4207. Following a stronger NFP we saw a pull-back to close the week and the month at the POC, 4147.5. There were signs of supply overhead at 4208 on Thursday, and a more competitive offer on Friday at Thursday's POC, 4192, leading to a weak close on Friday.

There's quite a clear buy imbalance on the weekly charts, and the auction continues to OTFH on all but the daily.

This week we will be looking to see if the double top at 4208-07 will be retested, with a large gap remaining unfilled from last August 18th-19th, in the 4251-4271 area.

Given how quickly the auction has advanced, I'll be expecting an early-week retest of the SB area, 4117 – 4090. Buyers should be lurking at the singles break between 4117 and 4091.5. A hold above it would give further evidence that higher prices are being accepted, and a look above the 4208 non-excess high is highly likely. That would see buyers targeting the unfilled gaps from August 18th, between 4271 and 4251.

4142 and 4109, the Dec and Jan highs respectively, I'll be monitoring for support from buyers. This is where we last saw initiative PA away from the prior monthly balance highs.

If buyers fail to hold the FOMC lows, I'll be looking for a test of the late Jan lows and an auction back to the CHVN and 200DMA around 3982. Let us see.