Market Analysis for The Week of 11/23

A Market Poised for Carnage or Christmas Cheer?

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SPY 0.00%↑ QQQ 0.00%↑

Coming into this past week, we were monitoring the overlapping multi-week balances:

Notice where the Monday and Thursday highs were defended (yellow box extended right) along with Friday’s low and close:

While maintaining a neutral bias, I have laid out a number of recent changes in character in the past few weekly plans. This past week could have gone either way. Sunday night saw an opening sell that was snapped up at key single prints from the Friday 11/14 profile. However, sellers ultimately defended this Sunday night rally just below where they needed to in order to remain in control, 25369-25388 on NQ and 6809.5-6812.5 on ES:

Note the Sunday night high on NQ was 25361.25

For ES the Sunday night high (and high of week) was 6801.5, well below where sellers needed to defend

The Wednesday night into Thursday rally had a lot of people calling bottom. While it certainly could have been, we note from the first set of pictures (top of the yellow box) that this was not a place to be aggressively long. Did I know that we would sell 240 handles on ES and 1200 handles on NQ? Absolutely not. However, the potential was absolutely there.

The premarket update outlined the need for caution as the major target for the move higher was 25282-25292 on NQ and 6775-6778 on ES. A number of charts were completely broken, likely to be sold at open, and SPX/SPY was coming right into the area where a lower high would be made if it were going to be.

The selling on ES wasn’t particularly impressive at the open, but was better on NQ. Note what happened, however, when YM tagged 939:

NQ sellers were absorbing in the 282-292 spot, and when YM tagged 939 everything completely rolled over as all indices looked above and failed their IB highs:

Again, did I know that we would sell that hard? No. But with nothing but a gap below, there was potential for a retest of Wednesday’s high. If Wednesday’s high did not hold then absolutely it was likely to come all the way back down. A LAAF Wednesday’s high was a short setup for the day. It is pretty wild that it came from so much higher, but it carried the same target which was ultimately Tuesday’s low.

We are now left with yet another Friday which looks constructive. We played the long side for the monster move after sellers failed for the second time below the IB low and prior day low:

We were not expecting a small move from this:

I wanted our weekly 6650-6653 or break even for at least one runner

The silly news that hit certainly facilitated the move more quickly, but ES was destined for at least the 6650s. Not everyone has had a good time the last few weeks. By maintaining a neutral bias and willingness to play both sides, we have had numerous trades of 100+ handles on both sides of the tape the last couple of weeks and had some fun while doing it.

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