Nasdaq futures were already operating on slightly above average volume ahead of the 8:30am GPD release. Prices were up ahead of the data and saw a slight selling reaction to the inline numbers. There is also news of Bill Gross leaving Pimco for Janus Capital. Since the news came out we have seen selling accelerate a bit and the news has also served as a disruption to the overall bond market.
Yesterday the sellers made enough progress on the Nasdaq to call intermediate term balance into question. The boundaries of intermediate term balance as well as any bracketed-type trade are always a bit grey, meaning you cannot assign a fixed price level to them. Instead we can use volume profile to see if activity dries up as we enter the extreme territory. Also of importance is the price action leading into the extreme. This move lower started with a failed auction, an attempt to make new highs where activity quickly evaporated followed by a fast move in the opposite direction. It then printed a lower high and lower low suggesting multiple day seller control. This balance is going on 30 sessions old. Once they become this mature the likelihood of leaving them to explore new prices is elevated. In summary, we are at risk of starting a discovery process lower. I have highlighted these observations and more on the following intermediate term market profile:
I have noted short term price levels on the following market profile chart. Note also, barely visible in the top left of the chart is the “solid structure” I discussed yesterday. This multiple day support foundation was obliterated yesterday and is out of normal upside range as of our current premarket prices. See below:
Primary hypothesis – sellers push off the open, trade gets murky at 4012 before giving way to a gap fill to 4005 where responsive buyers attempt higher to 4022.50 selling tail
Hypo 2 – buyers press higher off open, take out overnight high 4020.75 but stall near 4022.50 selling tail where sellers emerge and take us back to 4012 VPOC and then down to 4005 gap fill and target a test of yesterday low 3998.25. If they can take out the low then look for range gap fill to 3994.50 which increases the probability of full gap fill to 3985.75 where we find responsive buying and balance out
Hypo 3 – buyers drive off the open, take out 4022.50 selling tail and sustain trade above here for over an hour before setting up another wave of buying up to MCLVN 4037.75 to see if they can regain the “solid structure” zone
Hypo 4 – continue driving lower, searching for buyers, take out Ylow 3998.25 quickly, complete full gap fill to 3985.75 quickly and continue liquidating deeper into the composite structure at 3980
Raul3, i apologize in advance of my ignorance, but why the Ndq 100 for ur analysis? Thanks!
It is the primary instrument I intend to to trade thus I am building an intimate understanding of the product, its behavior, nuances, normal/abnormal, etc. Also, it gives me a good feel of overall market sentiment.
change in flow, time to buy and sell, etc. chicken before the egg, egg before the chicken etc tec