Nasdaq futures were quiet overnight, trading a balanced session with normal volume and range. The session featured a slight drift higher. The action took place in the upper quad of yesterday’s range, slightly exceeding it and testing the key LVN at 4493.50.
At 8:30 am Advance Retail Sales came in below expectations. The initial reaction is muted-to-positive. Also on the economic docket today we have China GDP at 10pm. Tomorrow morning Fed Chair Yellen will deliver her semi-annual testimony to the House Financial Panel.
Intermediate term, we can see the Nasdaq is contained within bracketed/neutral trade. It has been like a ping-pong match since about February. Last week we bounced along the bottom of the range before the Friday gap up.
Yesterday we opened to a big gap up and drove higher. Buyers became initiative during the session and we continued higher to close the 6/26 open gap and more. Overall the session has the structure of a double distribution trend day.
Heading into today, my primary expectation is for buyers to push above overnight high 4495.50 and test up to the LVN zone at 4512. Here I will look for responsive sellers and two-way trade to ensue.
Hypo 2 sellers push into the overnight inventory to close the gap to 4487.50 then continue lower to test down to 4480. Look for buyers to defend here and balanced trade inside the upper quadrant of yesterday’s range.
Hypo 3 sellers push down through 4480 to test the conviction of yesterday morning’s open drive buyers around 4467. If buyers no show, look for liquidation to take hold, pushing down through to 4444. Stretch targets on the downside are 4434.50, 4427.25, then a full weekend gap fill down to 4409.
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