NASDAQ futures are priced to open gap down after an overnight session featuring extreme range on elevated volume. Balanced trade gave way to sellers who worked down into last Tuesday’s range before finding a small responsive bid. At 7am MBA mortgage applications data came out way lower than last month. Little reaction to the data so far.
Also on the economic docket today we have Market Services/Composite PMI, New Home Sales at 10am, Crude Oil inventories at 10:30am, a 2-year floating rate note auction at 11:30am, and a 5-year note auction at 1pm.
Yesterday we printed a double distribution trend down. Morning buyers made the small push up to close the overnight gap and held Monday’s range until just after the 10am Consumer Confidence read. After the data sellers stepped in hard. The managed to become initiative after the initial sale and continued pushing price lower to close the weekend gap [recall: Bulls Push Their Luck and Start Another Week Gap Up]
Heading into today my primary expectation is for buyers to push into the overnight inventory and trade up to 4144 before finding sellers who work to take out overnight low 4101.25 then target the open gap down at 4092.50.
Hypo 2 sellers push off the open, take out overnight low 4101.25 and close the gap down at 4092.50 before finding buyers and going into two way trade below 4125.
Hypo 3 sellers gap-and-go triggering liquidation. Trade down through 4092.50 early on and sustain trade below it setting up a secondary leg to target 4070.
Hypo 4 buyers managed to push up through 4144 and sustain trade above it, setting up a move to close the overnight gap at 4158.75. From there they continue higher to take out overnight high 4168.50. Stretch targets are 4172 then 4182.50.
Levels:
Volume profiles, gaps, and measured moves:
R…….C……S
It’s been a nice test.
ES: 1918.25 is the 61.8% fib level.
If we lose this again, the next pause may not come until 1874.5
…. Watching USD/JPY to see if it can get and hold above 111.8 or not