Thursday’s trade was surprising and amazing. Surprising in the depth of the late sell off — and amazing in the profitable trades that were available for the making. The NQ initially again started with a rally 12726 during the Globex session. While the U.S. also began with a rally, it failed early and did not succeed at additional attempts to lift prices beyond the overnight high. The last three hours of trade were very destructive to prices as well as the EW count. While the move itself does fit within expectations for a completing triangle pattern, it does seem to have exceeded levels that would be more acceptable. However, having said that, stranger things have happened recently, and they may happen again.
Tomorrow the CPI figures will be released pre-market. A great deal of “weight” is being placed on that number and that will undoubtedly have a strong effect on direction. If the number is perceived as good or dovish for the market, I would expect the buyers to gallop back in and provide the “thrust” higher that would be associated with the completion of the triangle pattern. Should the number not be favorable to the markets the sellers are likely to continue the acceleration to the downside.
Here are the levels for resistance and support: Resistance for an upside move should be found at 12726, 12783, 12810, 12945, 13000, 13394, and 13845. Support for a continued downside move should be found at 12040, 11850, 11670, 11576, 11491 to 11483, 11033, 10582, 10250, 9940, and then 9124. And no, I wouldn’t be looking for either extreme in resistance or support to be reached tomorrow.