Wednesday's Prep

Nothing like the Fed to juice equity prices.  After trading very slowly in a narrow range in a state of anticipation, the market exploded to the upside after Yellen's speech text became available.  How many times have we seen that show before?

However, the market wasn't as strong as price would lead you to believe.  Let's review:

My first observation is focused on value: despite a rally that crossed the majority of the range, the fairest price remained lower.  This really takes some of the air out of the bubble (no pun intended) going forward.  The market was unable to establish fair prices as higher. 

Furthermore, the triple-distribution profile structure doesn't inspire confidence that this rally will last - usually the excessive price movements will be retraced in the following sessions (refer to the market on 3/19 as a recent example of this).

Daily chart view:

Today closed at the high of the trading range.  I believe balance trading rules are in effect coming into tomorrow:

1. Remain in balance.  
This would see price staying within the range, under the high and above the low, and likely trading down to at least within the middle distribution.

2. Look outside the balance and fail.
This would see a price probe above the 2048 range high that is met with a wall of selling.  The profile should not show price acceptance (that is, more than one or two time periods-wide) above the high.  Remember how time regulates the opportunity - if price looks 'n fails it is a hot opportunity that shouldn't last long.

3. Look outside the balance and accelerate.
This would see a price probe above the 2048 range that is met with more buying, accelerating price higher and over time finding acceptance above it.  In this case, the range high becomes the reference to buy at or near.
Note: this scenario can involve opening in an upgap situation, gapping away from balance.  Monitor the market for continuation after the open to determine if it is likely to be a look 'n accelerate situation.

Of the three potential scenarios, my intuition tells me scenario three is the likely one to occur tomorrow.  While today's rally wasn't as strong as it appeared on the surface, there are simply no strong sellers yet in the current market - meaning, price hasn't yet auctioned high enough to attract sell interest.

Reference I have above the market include:
2050: psychological price
2055: Dec 30 downspike base
2058: Dec 30 prominent point of control
2061: Dec 30 high
2067.5: Excess high