Markets operate on fractals which occur on all timeframes and they look the same only the scales can be much larger. One of the predominant characteristics of the market is to ‘check back’ or revisit a zone where a significant event occurred. Once the Nasdaq broke loose to the downside its first stop was the major resistance zone we printed back in March 2014. As we approach US cash trade, we are seeing some follow through from buyers who showed up at this level. Volumes are still running on the high end in the globex session, but, as you might imagine, they are lower as we head higher.
Giving boost to index prices is speculation of additional stimulus according to many of the media outlets. However it makes more sense to attribute this move to the oversold conditions which have persisted in the market since last week. The issue we have is how long the market stayed oversold. This type of long duration oversold event often precludes a shift in sentiment overall.
Investors are looking for this round of earnings to build confidence in the marketplace and thus far results have been mixed. The earning season is only beginning however. We have U of M Confidence numbers at 10am and an otherwise quiet economic calendar. Also, although it might seem a bit trite, I continue to monitor the trade in NFLX after its jaw dropping 20% move to see how the market digests it.
I have noted the ‘check back’ on the following chart, and also where we are likely to run into some sellers. These are very broad brush strokes which we can refine on a shorter timeframe, and then refine on a shorter timeframe, and then refine on a shorter timeframe to day trade. However, stock traders and swing traders/investors should be keen on these zones:
We are currently trading on the upper edge of yesterday’s range and it will be important to observe early on if buyers reject yesterday’s range. If they do, we are likely to explore higher which puts prices into an air pocket which might lend to upside acceleration, especially if shorts begin to cover. You will also notice the 2-day balance we formed on the lows featuring a clean taper bottom and a centralized VPOC—lovely symmetry. I have also noted the price levels I will be observing:
Detroit @Raul3 if you don’t mind could you please give me a rundown on your market profile acronyms please sir? I’m familiar with the profile just not your vocab. MC in particular of the VPOC. Thank you. By the way some guy tried to offer me some pumpkin pie the other day. I didn’t want to turn it down but I did. Still in regret. Never turn down free food.