06.27.22 | Auction Market Analysis

Two-Week Retrospective and Key Levels

[10:30 AM, Monday, June 27]

What Drove Friday’s Up-Auction

St. Louis Fed President James Bullard suggested that concern over a US recession were overblown.  The University of Michigan’s measure of long-term consumer inflation expectations came off of its 14-year high.  Taken together, investors saw a lower probability of steeper rate hikes in the future.

Identifying Upside/Downside Targets

Fair value is defined as the price level that attracts the greatest volume of trading.

Following a gap up on Friday, trading carried through to the upside … marking a single print buying tail and a “P” shaped profile … with the market rotating into the close, just shy of 3900.

In an uptrending market, an upper range extension that holds argues for continuation of trend.

Today’s Auction

At this writing, today’s business is likely to test 3900.  If accepted, trading above this level would suggest strength.  Should  price break above Friday’s balance area, buyers will have gained control … after a 3-week down auction.

A trending market moves from balance to imbalance … pauses to consolidate … and moves again … until the trend is complete.