From yesterday's prep: 'My main expectation is for sellers to step in at the 73.00-74.75 IR zone and for trade to churn between the IR zone and the short term bull/bear zone (61.50-64.00) ahead of the FOMC minutes later today. We may not see any directional conviction until either of those zones is broken with sustained momentum, volume and market breadth.'
We did end up reacting at both zones; the first two at IR were accompanied by weak TICK momentum, supporting a fade of the zone. The move down into the micro bull/bear zone was after the minutes. TICK momentum was negative but not overly so. Also, the advance/decline was sitting steady & positively around +600 which didn't support continuation of the down move.
The market profile above shows how there was a break either side of the initial balance. When there is a wide POC in the middle of the IB and both sides are broken, the chance is greater that price moves back towards that POC as we saw into the close. The FOMC minutes failed to ignite a move through either zone, so for now price remains within this composite high volume area.
Overnight so far the market has remained in the bottom half of yesterdays range and has been trying to press lower, though holding yesterday's RTH low currently. The zones remain the same as yesterday, though clearly the more times a zone gets tested, the weaker it gets. The current pace of the summer market requires even more patience than normal.
The daily chart below includes monthly volume profiles plus the composite. The monthly trend remains bullish, however, the daily moves have now flattened the upwardly trending 20 day sma and it is holding below it after failing to push above the edge of the upper volume distribution. A move through yesterday's high with enough strength will put the squeeze on shorts and make a challenge for the high again. A lack of buying interest could see a break lower again, possibly to retest the high volume 35/36 area. The contraction in daily ranges over the past few days may continue for now, but looking for a decent move soon and a sell-off is likely to be jumped on by hedge funds in my view. A squeeze to the upside I see petering out with low volume. We shall see!
Zones for today: