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This analysis is going to seem weird by previous comparisons, but when potential “toilet flush” (bearish) economic data follows a relief rally from the previous “toilet flush” economic announcement, ranges expand to deal with the volatility.
All the comments regarding the potential change of trend that I mentioned over the last two to three weeks are still in play. Today’s potential “toilet flush” or “fountain” (bullish) announcement will be maintained inside the leading economic indicators announcement, which is supposedly going to be less bearish than it was in December.
Given that fact, and the fact that the price range over the previous two trading days was so wild, as long as MNQH23 on an hourly basis remains above its VWAP line around 11380, there is a chance it could blow through that theoretical bearish trendline around the 11720.50 area and push perhaps to 11793.50, to a VWAP line of a previous week at 11824.75 and potentially as high as 11906.21. That might, as long as economic data and political horse manure that surrounds this and other US equity markets doesn’t obliterate its momentum, could indeed establish a new bullish tone to MNQH23 again (even, as I described yesterday, it may only be a temporary countertrend rally in the bigger picture).
If it cannot break out above 11720.50, you could likely see a pullback that could to the VWAP line at 11509 and perhaps to as low as 11466.75, another previous VWAP line. If the news is bearish for Fed interest rate policy, the pullback could be harsh.
It all depends on whether buyers or sellers dominate the action. Given what might happen with LEI, it could be decisive either way or perhaps not. We will have to watch as 0830 EST and 0930 EST approach.
There was little volume action overnight to push the needle one way or the other.
I was booted at breakeven Friday, and because I had business to take care of and could not trade after 1100 EST, I missed the third and decisive breakout. I did NOT lose a cent in those trades, however, so I did my first job. I protected my equity.
More will be coming soon. Have a great Monday and a great week trading.
Economic Data Courtesy of Econoday dot com
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