Nasdaq futures are pairing back some of their overnight gains as we head into cash open. The overall structure is balanced on a normal range for Globex but on slightly abnormal (2nd sigma) volume.
At 8:30am Empire Manufacturing came in lower than expected and introduced some selling to the market. Also on the agenda today are NAHB Housing Market Index at 10am, Fed’s Plosser speaking at 12:45pm, and Net Long Term TIC Flows at 4pm. Traders will also focus on tomorrow afternoons FOMC minutes which are just on the horizon during this option expiration week.
Taking to the charts, we see buyers probing up above prior swing highs after chopping through a multi-month range dating back to late October. Thus the long term is neutral-to-bullish—the risk of mean revision back into the range is still present.
Intermediate term we are bullish. Price and value have been migrating higher for over two weeks. Along the way we left some open gaps and naked VPOCs. Friday we printed a normal variation after sellers could not range extend lower and close the overnight gap. Instead we traded higher into the weekend.
Heading into today, my primary expectation is for sellers to push into the overnight inventory and test down through the overnight low 4364.50 to tag the NVPOC at 4360. Here I will look for responsive buyers to take us back up to Friday’s close 4377.25 then take out the overnight high 4385.75 to target the measured move up to 4391.25.
Hypo 2 is buyers defend around Friday’s close 4377.25 and continue exploring higher prices. Take out overnight high 4385.75 and measured move target 4391.25 to begin working toward 4417.50.
Hypo 3 is sellers aggressive and overshoot the NVPOC at 4360 to test the LVN at 4353 and then eventually close Thursday’s gap down to 4345.75 with a stretch target down to 4326.75.
These levels are highlighted on the following volume profile chart:
There is also a EuroGroup roundtable meeting with Draghi and Coeure about to start