The Cycle Is Nearly Complete

Nasdaq futures are priced to gap up into Thursday after a session featuring normal range and volume. Action normalized overnight after several volatile globex sessions. Price managed to hold the upper quadrant of yesterday after pushing deep into last Friday’s range—well up into its midpoint. At 8:30am Initial/Continuing Jobless claims and Trade Balance came out. The initial reaction to the data is a strong buy.

On the docket today is ISM Non-Manufacturing at 10am. We also have tomorrow morning’s Non-farm Payroll on the horizon, and it’s nearing due date is likely to have an impact on market action.

Yesterday, and I cannot make this up, we printed the 7^th consecutive neutral day. These are truly rare times. Price opened gap and sellers spent much of the morning working into the overnight inventory but buyers stepped in before the overnight gap could fill. From there were churned until The Fed released their Beige Book at 2pm. 3^rd reaction analysis yielded the buy signal and shortly after buyers were pushing into the market and sending us neutral. Then at the end of the day a strong wave of buying came in and nearly closed the Friday, 8/31 open gap, per hypo 2 from yesterday’s report.

Heading into today, my primary expectation is for buyers to squeeze up off the open to target 4322. From here I will look for responsive sellers and 2-way trade to ensue north of 4280.

Hypo 2 sellers work into the overnight inventory to close the gap down to 4259. From there look for sellers to target overnight low 4254. The profile gets a little slippery here but look for responsive buyers to defend yesterday’s close and two way trade ensues.

Hypo 3 sellers continue pushing down through 4250 setting up a liquidation down the zipper to target 4211.

Hypo 4 (today needs 4 hypos) strong buyers continue to push and test above last Friday’s high to target the open Thursday gap at 4332.50.

Levels: