NASDAQ futures are coming into Thursday gap up after an overnight session featuring extreme range and volume. Price managed to trade within yesterday’s range in nearly symmetrical balanced trade. At 8:30am Durable Goods data came out way below expectations. At the same time, Initial/Continuing Jobless claims data was mixed. The initial reaction is selling.
Also on the economic calendar today we have Pending Home Sales at 10am and a 7-Year Note auction at 1pm.
Yesterday we printed a neutral extreme down. The data started with a gap down and sellers driving price lower. Just moments after the first hour of trade completed, a strong responsive bid was found right at last Thursday’s naked volume point of control 4153. Buyers pressed through the entire range and put the market Neutral ahead of the FOMC rate decision.
Third reaction yielded a mixed, but consensus sell signal and we pushed lower, taking out the lower ATR band before finding responsive buyers deep inside last Thursday’s range.
Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4128.50. Look for responsive buyers to defend here, keeping us from testing yesterday’s low 4102. Two way trade ensues with a price ceiling around 4180.
Hypo 2 sellers push the gap fill down to 4128.50 then continue lower to test below yesterday’s low 4102. This triggers a liquidation. Downside target is 4070.
Hypo 3 buyers gap-and-go. Price works up though 4180 and sustains trade above it setting up a move to take out overnight high 4190. Responsive sellers step in at 4211 and two way trade ensues. Stretch targets are 4225 then 4247.50.
Hypo 4 sellers push into overnight inventory but cannot fill gap down to 4128.50. Instead buyers defend 4140 and the market spends the rest of the session working higher to take out overnight high 4190.
Levels:
If you enjoy the content at iBankCoin, please follow us on Twitter