Thursday’s trade did start as expected with a negative CPI number sending the ES and NQ into a tailspin lower. Both reached early lows before beginning to bounce. About 11 AM EDT all hell broke loose with the markets racing higher as the “short squeeze” took hold. Understandably, the media is having a field day of reporters attempting to give a definitive answer as to what the hell took place against the backdrop of higher inflation.
I discuss trading such moves and what really needs to take place in each of us as traders. I talk about some of the factors that may have stimulated and then propagated the short squeeze. Nonetheless, the ES and NQ rallied right up to and including the close.
Tomorrow is an expiration. Retails sales data is reported pre-market. Also, pre-market, JPM, WFC, and MS report earnings. There will be much to digest early and therefore trend is likely to be set before the bell. I discuss both upside and downside for tomorrow. I have updated the Elliott labeling to reflect an alternate view that remained in my purview but not front and center. But it does appear that Intermediate wave 3 may have completed at today’s lows in both the ES and NQ. If this is the case, an Intermediate wave 4 is now in process. Fibonacci levels for the moves are discussed and included tonight.