Candles & Ticks | Daily Digest 09/21/2022
Fed hikes by 75 bps, but future projections cause markets to tumble. The 2-year T-Note continues its rise.
Market Overview
The Fed announced that they are raising the Fed Funds rate another 75 basis points. Markets were positive prior to the announcement and by the end of Fed Chair Powell’s Q+A, equities were being sold off. As SoFi’s Liz Young stated, it wasn’t the 75 bps hike but the “quarterly summary of economic projections.” The Fed’s 2022, 2023 and 2024 projections for the Fed Funds Rate, PCE and unemployment were all revised higher. Thus, the S&P 500 ended the day underneath 3800, the lowest it has been since July 14th. The 21-point gap from July 14-15 was filled in today’s selloff. The 2-year Treasury got as high as 4.12% before ending the day at 4.12%. Every S&P sector was red and longer duration Treasuries (10-year and 30-year) dipped as well. The table below displays the S&P 500’s performance near every rate hike this year.
Here are some of today’s closing prices.
Top-Down Analysis
Below are the monthly (5-years), weekly (2-years) and daily (6-months) charts for ES.
M/M: After rallying above the high of the previous 3-months, August lost 4% M/M. It closed below the midpoint from the prior 3-month range. ES has been balancing from May to August. Unless the month of September can eclipse the 4327.5 August high, ES will be OTFD.
W/W: ES had its worst week since mid-June. For the past 3-weeks ES has been in balance.
D/D: ES failed to take out the prior day’s high and fell beneath the previous 3-day balance zone. It dipped beneath the 3800 level momentarily before settling at 3806. It’s the lowest level since July 15th.
E-mini S&P 500 Metrics
Recent History and Performance
Technicals
ES Composite Volume Profile (5 days)
ETH VAH: 3902.50
ETH VPOC: 3891
ETH VAL: 3845
Here is a chart of the past five sessions with a composite ETH Volume Profile:
ES RTH Volume Profile (today)
RTH VAH: 3908
RTH VPOC: 3892
RTH VAL: 3847.5
Here is a chart of the past five sessions with a daily ETH/RTH split Volume Profile:
ES RTH Market Profile (today)
RTH TPOC: 3891.50
RTH Poor Low/High: 3792
RTH Single Prints: 3798.75 to 3803.75; 3808.25 to 3832.25;
RTH Excess: 3912.75 to 3925.25
Here’s a TPO chart of today’s session with ETH/RTH split Market Profile:
Session Recap
Electronic Trading Hours (ETH)
Globex Session:
Wholesale was short at the prior day’s close. The ONO was inside of the prior day’s value area. Globex short 74% of the time. It began the ON sessions trading sideways underneath the prior day’s close before shorts moved the auction underneath the prior day’s VAL. There were buyers in this vicinity as ES couldn’t accept and the auction rotated back into value and through the VWAP. Demand continued to outdo supply as ES rose above the prior day’s VAH and surpassed the HOD by a couple of handles.
ONO: 3878.75
ONH: 3896.75
ONL: 3854.75
Range: 42
Regular Trading Hours (RTH)
US Session:
The RTH open was inside the prior day’s high by 1-tick. It was also inside the T+2 high and low. At the open, ES traded back and forth in a 15-point range. With some lack of supply, buyers were able to lift ES higher to take out the ONH and continue trading above the prior day’s high. The uncertainty continued for the next few TPO periods as ES set a new high each period but also continued to whipsaw between 15 and 20-handles. At 3905, buyers faded and sellers backfilled to seek demand. ES traded in a tight 20-points range for the next few hours as traders awaited the Fed announcement. At 2pm, ES was at 3905 and just put in a poor high. Once the Fed rate hike was announced, ES dropped 70-handles in about 6-minutes down to 3832.75. When Fed Chair Powell began his 2:30pm remarks, the market began rotating up. Buyers lifted the auction with limited supply and took out the prior session highs. ES topped out at 3925.25 before supply crashed ES by the end of Powell’s Q+A. ES OTFD violently for three TPO periods that saw it fall 130-points. ES ended RTH underneath 3800.
O: 3893
H: 3925.25
L: 3792
Range: 133.25