After last Thursday’s strong trend, the market spent time coming to terms with the new index pricing by auctioning. This process began Thursday afternoon and by Friday afternoon the consensus was to explore a bit higher for value. Thus the intermediate term timeframe continued to press on for the buyer.
The long term timeframe is back into the steady hands of the bull camp. This can be seen on a daily or weekly chart of the NASDAQ composite. Overnight, prices have rotated a bit higher, in a drift of sorts.
The logical trade early on then, would be to press into that overnight inventory of longs, and see if lower prices can motivate selling/liquidation. I have highlighted the relevant price levels that developed in a rather large and organized distribution atop our trend. I will be keying off these levels, should they be tested, to gauge buyer confidence and response. These levels and more can be seen below on the following market profile chart:
