NASDAQ futures traded more than a 100 point range overnight (60 points is 3rd sigma) on extremely high volume. The duration of globex was spent trending lower, pushing price down to levels not seen since late October of last year. At 8:15am ADP Employment change came in at 257k vs 192k expectation, stronger than expectations, the initial reaction is buying.
There are several economic events scheduled for today. At 10am the ISM Non-Manufacturing Composite will be released followed by 10:30am crude and distillate inventories. The main news comes at 2pm, when The Fed releases minutes from their December meeting.
Yesterday we printed a normal variation down. Price opened with a small gap up and was quickly sold lower. In the early afternoon buyers put in a low, but a weak one, and we ended the day trading near the midpoint of the session.
Heading into today my primary expectation is for buyers to work into the overnight inventory a bit. We are working with a pro gap, currently 86 points wide. The half gap mark is around 4441. Look for buyers to make an attempt into the Monday range at 4429.75 and responsive sellers to step in and reject the range around 4440. From there look for price to trade lower but form 2-way balance ahead of the FOMC minutes.
Hypo 2 gap and drive lower. Sellers take out overnight low 4386 early on setting up a move to target 4367.7. Responsive buyers here are overrun as sellers target 4357. Stretch target is the open gap at 4326.50 from 10/14.
Hypo 3 take out overnight low 4386 and find responsive buyers just below it setting up a tight-choppy range ahead of the minutes.
Hypo 4 V-shaped bounce. Strong responsive buying off the open recaptures Monday’s range and sustains trade above 4432 setting up a secondary leg to target 4484.25.
Levels:
