Another Big Night Session To Work Through

We are headed into Thursday trade pro gap down (2^nd pro gap down this week) after an extreme session. Both range and volume pressed out beyond 3^rd sigma while price auctioned around. Yesterday evening price exceeded RTH low briefly before pressing higher. Upon testing globex high, around 4:30am, we had a failed auction and subsequently traversed the entire range and more, putting us at fresh weekly lows. At 8:30am Initial/Continuing jobless claims data came out mixed. We also had Durable Goods Orders out at 8:30 and the data was slightly better than expected. So far futures have not reacted to the data.

Also on the agenda today is New Home sales at 10am. It will be an interesting stat after seeing the big upward beat in MBA Mortgage Applications yesterday and Monday’s unexpected drop in Existing Home Sales, perhaps a resolution of the mixed message in housing if you will.

Yesterday we printed a neutral day. Price opened gap up, faded, held Tuesday’s upper quad before making range extension up. Price then went for a retest of the low, putting us neutral, then we churned into the bell.

Heading into today my primary expectation is for price to work lower. We may see buyers push into the overnight inventory but look for them to stall out ahead of 4242. Then look for sellers to continue lower to close the 9/4 open gap down at 4194. From there look for a strong responsive bid and buyers to work the gap fill all the way up to 4264.75.

Hypo 2 sellers gap-and-go lower, take out overnight low 4206 early and close the 9/4 gap down to 4194. Responsive bid is overrun setting up a liquidation down to 4164.

Hypo 3 strong buying on the open, works up through 4250 early and continues higher to close the overnight gap up to 4264.75. Then buyer set their sights on overnight high 4278.75. Look for sellers to defend 4282.

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