Nasdaq futures are pricing a gap down heading into Friday. The index continued lower after trending lower Thursday. The action featured an elevated range but printed on extremely abnormal volume—well over the 60k second sigma mark. Price managed to push down below the open gap from 07/09 and briefly poke below the swing low before finding buyers. Sellers could be seen defending Thursday’s range and rolling price over as we head into the open.
The economic docket is light this summer Friday, with Markit Manufacturing PMI at 9:45am and the Baker Hughes Rig Count at 1pm.
Yesterday was a trend day down in market profile context. Such a day type is considered a ‘risk free’ entry into the following session meaning expectation is we exceed the trend day’s range by at least a tick the following session. The day started with a gap down followed by an opening sell drive. Price spent some time negotiating the 4400 century mark before initiating a fresh leg lower to close the 07/10 open gap at 4409.
Our contextual sub indices of the Nasdaq are interesting here. We saw the anticipated flush lower in semiconductors, but the Nasdsaq Transportation index is well off its recent lows. This divergence is a feather in the bull cap.
Heading into today, my primary expectation is for any early excitement to quickly fizzle into Friday summer trade. Today is monthly option expiration day, and the most important action is pinning both longs and shorts down. Look for buyers to attempt a move back up to 4363.50 overnight gap but struggle and roll over then take out overnight low 4328.75. Price continues exploring lower prices. Look for responsive buyers ahead of the 3/26 low at 4271.75 then a rip back into Thursday’s range to end the session.
Hypo 2 sellers gap and go lower, take out overnight low 4328.75 quick, then crickets, then a sharp reversal to close up near 4395.75 MCVPOC and/or 4400.
Hypo 3 full on liquidation—take out overnight low 4328.75 and accelerate to target the 3/26 low at 4271.75.
Hypo 4 strong push to close the overnight gap up to 4363.50 and then a pole climb up to 4400, churn, then initiative buyers push up to 4436.50.
Levels:
