Nasdaq futures started to drift lower overnight shortly after we heard data on German unemployment early this morning. The resulting range on the entire session is still within the 1st standard deviation of normal although volume picked up to levels we have not seen since the fast down markets of a few weeks ago. At 8:30am the US quarterly GDP stats were released along with jobless claims and personal consumption. GDP was better than expected in the third quarter and the other data were worse than expected and the net reaction was an aggressive responsive buy taking us nearly to the midpoint of the overnight session (4064).
The overnight session managed to press into Monday’s range before finding responsive buyers. It will be interesting to see in the cash trade hours whether a retest of this overnight low occurs and how it is treated. Since the gap higher Tuesday morning I have noted that we are provided with a unique opportunity to gauge demand. How the market trades relative to this gap, mainly if buyers sharply reject us from Monday’s clean balance, will be a clear clue of short term sentiment.
I present only the volume profile mashup chart today. Notice how well recent action has adhered to the price levels noted on the chart. This is a clue that the intermediate term and short term time frame participants are the primary drivers of market rotation. If instead we begin seeing large moves which ignore or steamroll these levels, then we know an even higher time frame is participating and it makes sense to step out of their way. I made no adjustments to these levels from yesterday, they are still key reference points as we go about trade: