The Coming-Around-the-Mountain Pattern

It is not likely an exaggeration to say that the pattern of the major indices gapping down and printing the lows of the session within the first 10-90 minutes after the opening bell occurred several dozen--if not over a hundred times--over the last two years. 

The buy programs would pounce on any initial weakness and ignite a furious squeeze, with 0DTE call buyers front and center. 

Indeed, we saw a much yesterday, seen on the lefthand side of the 5-minute S&P 500 Index chart, below. 

However, in a change in character, the initial squeeze did not stabilize and in fact led to an afternoon swoon closing us below the morning lows. Again, in most instances over the last two years we would either squeeze to new highs throughout the afternoon or have a more modest giveback with price holding comfortably above the morning lows. But yesterday we saw price "coming around the mountain" back below those opening lows. 

And now today we are (surprise, surprise) seeing that pattern of the morning lows. With about ninety minutes left in the session as I write this, the issue is whether the change in character persists with afternoon weakness. 

NVDA earnings loom tomorrow evening, then the GDP and PCE data points to close out the week. This is still a bearish seasonal time of year, until about March OpEX. Tech and semis are leading lower again, with bulls expecting Jensen to pull the rabbit out of the hat once again tomorrow with NVDA. 

Simply put, the most objective way to assess whether we truly have a regime change underway (Stevie Cohen himself implied as much recently) from a technical standpoint is if we see afternoon fades as opposed to strong or moderately strong closes, because we know the mainstay for quite some time has been those early morning initial lows.