Nasdaq futures are trading lower overnight on a range that extended a touch beyond first sigma and normal volume. It’s important to note, however, that we are in rollforward conditions here. Most participants switched from the June to the September contract yesterday, but a fair amount of volume is still occurring on the June contract.
The main feature of the overnight session is a big push lower, around 6:30am, perhaps associated with concerns over mounting doubt the EU will resolve the Greek situation. This recurring news item, as well as liquidity concerns in bonds, has us in an elevated headline risk environment.
On a bigger picture, the daily chart, if we go into the weekend under heavy selling, bulls have to respect the lower high print as it would signify we peaked out on the low-end of our well-established value range. Volatiliy did not compress as I envisioned last weekend.
The economic calendar features the primary reading of U of Michigan Confidence at 10am. This has generating intraday moves recently. We also have the Baker Hughes Rig Count at 1pm.
Heading into today, my primary expectation is for buyers to push into the overnight inventory and close the gap up to 4488 before two-way trade ensues from 4490 – 4460.
Hypo 2 gap and go lower, push down to 4442.50 before responsive buyers step in and begin working us higher to close the week near 4470.
Hypo 3 gap and go lower, liquidation takes hold, we press down through 4442.50 early setting up a move to close the gap down at 4431.
Levels:
