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Joined Oct 26, 2011
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NASDAQ Pro Gap Up After Neutral Extreme Action Yesterday

NASDAQ futures are priced for a pro gap up after an overnight session that featured normal range and volume. Price spent most of the session working higher, especially after European markets opened. Price managed to work into the upper quadrant of the 12/17 range before finding responsive sellers. At 9am the S&P/Case-Shiller Composite-20 came in slightly lower than expected. The initial reaction is slight selling.

Also on the economic calendar today we have the December Consumer Confidence read at 10am.

Yesterday we printed a neutral extreme up. Early selling pressure managed to push the session range extension down, but before lunchtime responsive buyers were on the scene and bidding price higher. By early afternoon buyers made a strong move up/away from the mid which set up a tight compression near session high. At the end of the day the market pressed neutral and closed near the high giving the day structure the neutral extreme naming convention and some directional conviction heading into today.

Heading into today my primary expectation is for sellers to work into the overnight inventory. Look for responsive buyers (responsive relative to the open, initiative relative to yesterday close) to show up around 4626. Then look for a move to take out overnight high 4649. After a two-way auction of the 4650 zone buyers continue working higher to target 4669.

Hypo 2 sellers work down through the entire gap fill but it takes time. First the market finds responsive buyers around 4617.75. These buyers are overrun, taking trade down to 4615. Then a move to take out overnight low 4610.50 sets up. Look for responsive buyers at yesterday NVPOC 4605.50 and two way trade ensues.

Hypo 3 strong gap and go higher. Price works up to 4669 early and sustains above it, setting up a secondary leg to target ATH high 4683.25.



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