I spent the morning updating my charts and stats to the current market conditions and the result is overwhelmingly neutral. Nasdaq futures are trading lower on the globex session after taking out Wednesday’s session high by a few ticks. The range and volume are both on the high end of normal as traders actively debated the true value of this instrument.
At 8:30am Initial/Continuing Jobless claims data came out mixed and brought sellers in who made a new overnight low. At 10am Leading Indicators and Philadelphia Fed info will be released. At this time Fed’s Tarullo will also begins his testimony to the Senate. At 10:30am Natural Gas Storage data is out.
Turning to the charts, yesterday we printed a neutral-extreme profile print suggesting strong upward directional conviction. The major move up was news driven. Participants drove price higher after the release of the FOMC rate decision and commentary. In the wake of the move is a zipper or single prints which are vulnerable to fast selling. Should price trade down below 4400 it may setup a fast move back to 4350 to reassess the crime scene.
Conversely, there are a few price magnets just above our current prices. Just above overnight high (4435) there is a micro-composite volume point of control (mCVPOC) and a bit higher an open gap (4472.50). These areas may attract price and lead to a drift higher.
Thus, my primary expectation heading into today is for buyers to work into the overnight inventory to close the gap up to 4421.25. From here look for buyers to attempt to take out overnight high 4435 and target the MCVPOC at 4444.25.
Hypo 2 is buyers are unable to sustain trade above yesterday’s close 4421.25 and responsive sellers step in to push below overnight low 4412.75. Look for responsive buyers ahead of 4405 who stabilize the action and balanced, 2-way trade ensues.
Hypo 3 is sellers push down through 4400 and sustain trade below this level setting up a fast move down the zipper. Look for buyers at 4385 but ultimately they are run over on the way back to 4350.
These levels are highlighted below:
