Nasdaq futures are lower as we head toward cash open. The range and volume associated with the move are about as normal as it comes, both falling right in the middle of their respective Gaussian distributions. Price managed to take out yesterday’s cash high 4175.25 for a while but eventually traded lower. Yesterday evening’s big surprise came from NFLX earnings, which propelled the stock much higher in after-hours trade. The Presidential State of The Union had little effect on index price. Just ahead of the 8:30am housing-type data we saw a run-up in prices which has subsequently faded off/traded flat since.
Yesterday we were gap up to start the week (on a Tuesday) and subsequently faded lower for much of the morning. It was only when price attempted to enter the value zone established when combining last Thursday and Friday that we saw a sharp responsive buyer. Their behavior was strong enough that it reversed the auction process in the opposite direction and we ended the day with a Neutral Extreme print.
The Neutral Extreme print carries strong directional conviction, second only to the trend, or, conviction day. Contributing to the validity of this structure was an end-of-day VPOC shift to the high end of the range. Calling the strength into question is cumulative delta, which, could not manage to stay positive.
Heading into today, my expectation is for buyers to push early on to close the overnight gap to 4167.25 then struggle a bit with 4171.50 before working to take out overnight high 4178.50 and targeting 4184.25 where we see sharp responsive selling.
Hypo 2 is sellers on the open work down to take out overnight low 4149 and target 4146 – 4142 where we see responsive selling and then an attempt at filling the overnight gap.
Hypo 3 is a stronger buying drive early on that takes out 4184.75 early on and opens the door to run up the zipper to 4229.75.
Hypo 4 is strong sellers take out 4142.50 and work back down into Tuesday’s lower distribution and target 4127.50.
These levels are on the following charts:Twitter