High-Level Coil Formation Ahead Of Eventful Wednesday

Tuesday, November 29, 2022-- Mptrader Pre-Market Update: Whatever was ailing the financial markets yesterday morning at this time (China Covid lockdown protests followed by reiterated hawkish Fed Head comments) appear to be on a back burner this AM. Indeed, Equity futures are higher, Chinese Equity Markets closed much higher in anticipation of some "bending" by the Xi CCP apparatus towards solving the Covid lockdown problem, Oil is higher, and yields are lower. 

What a difference 24 hours make, eh?

With no scheduled Fed Heads expected to create headlines today, and the only forthcoming potentially meaningful data point being the S&P/Case-Shiller Home Price Index, the highlight of today's session may we be the US-Iran World Cup Soccer Match at 2 PM ET! 

Be that as it may, tomorrow WILL BE an EVENTFUL SESSION regardless of what happens today. Wednesday is the final trading day of November. In the AM, we get economic data on Weekly Mortgage demand, the second estimate for GDP for Q3, 2022, ADP Payrolls, Personal Income and Spending, PCE price (inflation) data, Chicago PMI, Pending Home Sales, and JOLTS! ... But wait, there's more!

The BIG Kahuna himself, Fed Chair Jay Powell is scheduled to give a speech at 2:30 PM ET which EVERYONE will be parsing for any and every conceivable nuanced word or phrase for clues about the forthcoming trajectory of Fed interest rate policy... 

Heading into today's potentially uneventful session (ahead of tomorrow's festivities), let's have a look at my Hourly SPY pattern setup, which I will describe as a September-October bottom followed by a recovery rally period characterized by higher highs and higher pullback lows into the 11/15/22 recovery high at 403.54 (+16% from the 10/13/22 low).

All of the price action after the 11/15/22 high at 403.54 has carved out what appears to me to be a high-level Coil formation that when complete ETHER will prove to be a Top to the recovery rally period and pattern, OR a big Bull Flag type of continuation set up ahead of a thrust to new recovery highs (that projects into the 410-412 optimal target zone and perhaps as high at 418-420 prior to reaching upside exhaustion).

Right now, as long as support from 393 to 390 remains intact and viable, my pattern bias is to the upside for thrust to new recovery highs when the Coil is complete... Last is 396.59/62...