The GDP and Consumer Sentiment reports were to set the directional tone. The GDP missed hardily at 2.5% vs. 3.1% expected and yet the markets did not react in a big way. This our Fed sustained markets, bad economic news often equates to continued qualitative easing. There has been media talk of Fed analyzing banks to make sure they can handle a rate increase making traders worry that the end of easy money may be coming sooner rather than later. The poor GDP numbers squashes that idea for now. So instead of selling off in response to the numbers, the markets started climbing to bounce off the ES pivot point shortly after the cash open. The bounce was solid and the ES could only manage a shallow pullback after a 4 point move down and the institutional sellers were jumping on board. This is one of those iffy type order flow opportunities because of the market moving and pending Consumer Sentiment report in less than 10 minutes. The conservative thing to do is to wait for a better spot once the news shook out.
In chat I posted that the gap back to yesterday’s close of 1581.75 may be closed and if we’re lucky, a short opportunity might unfold there. The gap did close during the initial reaction to the good Consumer Sentiment number, but unfortunately no order flow opportunity unfolded. Price dropped back into it’s huge 71/79 range where volume became light and price action became whippy. There was really nothing of high probability to trade until price either retested the day’s high near yesterday’s close or moved done and test the S1 pivot and 71 area. Before lunch, price finally moved down to test the S1/71 area and a decent long order flow opportunity unfolded for today’s example trade.
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