Some thoughts to start the week:
Balance came early in the week as all eyes were on NFP at the end of the week. After an initial negative reaction to the number, buyers came back to the scene and gave a classic “2nd Move” to squeeze shorts and close on the weekly highs.
Is this the low of the fall? RTY made new yearly lows and closed back in the middle of the range. ES closed back at the top of a 2-week range. NQ closed above its 2-week range. This appears to be a “new move.” If it is….we will not see significant pullbacks. The prior ranges will hold against tests.
If, however, we accept back in the prior multi-day ranges, then we view this move higher as a “test” and something that sets the stage for new quarterly lows.
Taking a longer look at ES…The auction bounced off the adjusted 2023 VPOC and is now responsively pushing back to an inflection point around 4400. This area of price rejection will either reject us back lower again toward 4240-65, or accept above and return us to the 4500-4535 area. Should we fail back to the lower area, expectations building for an end of year push back toward the composite 4135, near the 2022 VPOC.
We have plenty of economic news on the radar this week: PPI; Fed Minutes; CPI & Bank Earnings.
Not sure of the impact (if any) of the conflict in Israel. Historically, those have been ignored by the markets.
VIX Curve: We saw some inversion in the nearest part of the curve into NFP, but the quick burnoff leaves the auction susceptible still.
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