NASDAQ futures are higher overnight after a session featuring normal range and volume. Price managed to hold Wednesday’s low before working up into yesterday’s midpoint which also aligns with a key MCLVN at 4424.50. At 8:30am Initial/Continuing claims data was slightly better than expectations. The initial reaction is buying.
We have a few more economic events scheduled. Today is the busiest day this week with House Price Index at 9am, Existing Home Sales and Leading Indicators at 10am, and Natural Gas Storage at 10:30am.
Yesterday we printed a normal variation down—the second consecutive day where initiative sellers stepped in. However, much like Tuesday, the market did a good job of finding responsive bids on its probes lower. Sellers did manage however to close the day near session low. Before turning lower we had a failed auction. Price closed the tiny gap left behind Monday at 4454.50 and made new swing high before sharply reversing lower.
Occasionally a mega balance forms on the market profile. Despite my best efforts to split the profile into smaller pieces, it doesn’t make sense. Therefore we have a large distribution covering several days. That is exactly what we have now (see colorful chart below).
Heading into today, my primary expectation is for buyers to gap and go up. The market likes the 4433 levels and we may spend some time here before working up and testing the VAH at 4446. Then two way trade ensues.
Hypo 2 sellers work into the overnight inventory and close the gap down to 4399. This sets up a move below overnight low 4398 and puts the market in a slippery spot to break ‘mega balance’ and cause liquidation. If this occurs look to target 4374 before looking for signs of responsive buying.
Hypo 3 strong buying takes us up through VAH 4446 setting up a secondary leg to target 4467.50.
Hypo 4 sellers push down into overnight inventory but stall out north of 4402 before two way trade ensues in and around overnight high 4424.50.
Levels:
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