Failed auctions are a theoretical price behavior you want to be on the lookout for. In a year rife with cataclysm and maleficent trading actions, the failed auction has precluded many fast moves. Today the NASDAQ printed two layers of failed auctions.
The first was on a micro scale. At 10:45:28.73 the NASDAQ went range extension up by one point and then promptly fell back down to the mid. The session was slow and I did not give it much weight. However, it was noted in Switchboard which pushed my bias from long to neutral:
But on a swing level, we made new contract high today. When the afternoon liquidation wave rolled through, it gave the daily chart a distinct failed auction tone. The move was news driven (in more way than 1) thus its reasonable to expect a ‘check back’ to about 4720 near term. However, how today’s print stands, it can be trouble. The key is whether the failed auction is confirmed via a swift down move soon (sort of like we saw happen today, above) See below:
I am not overly worried yet. The same thing happened in Facebook back in October and buyers managed to negate the action. But keep in mind, these failed auctions often preclude some fast moves, so protect your neck.
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Good analysis, thanks. I was on PB control on the ES today. Looked at the second push of 2103 as a potential short. Did not pull the trigger and instead looked for the retrace to buy. No dice. Tomorrow should be interesting.
Awesome job Raul. It looks like we have the same primary target on a hypothetical move down (4572 is my primary target, with a stretch of 4500) going into FED week. At that point we either sling shot to new contract highs into year end or we crash.