NASDAQ futures are coming into Wednesday with a slight gap down (as of 8:30am New York) after an overnight session featuring extreme range and volume. Price briefly probed higher overnight, taking out the Tuesday cash high by a few points before rapidly descending to the Tuesday midpoint. Then, around 6:30am a rapid rotation upward undid most of the overnight selling. As we approach cash open price is hovering in the upper quadrant of Tuesday’s range.
We have a busy economic docket today, all medium impact events. At 9:45am we have Markit service/manufacturing/composite PMI. At 10am new home sales, 10:30am crude oil inventories, a 2-year floating rate note auction at 11:30am, a 5-year note auction at 1pm, and the Fed’s beige book at 2pm.
Yesterday we printed a double distribution trend up. The day began with a pro-gap down and early drive lower. Responsive buyers stepped in ahead of the current swing low (from 10/11) and starting campaigning higher. Sellers initially rejected a move back into the Friday/Monday lows around 7100. We balanced out just below them before ramping up through them in the afternoon, eventually closing the entire pro-gap by late in the day and closing near session high.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7141. From here we continue higher, up through overnight high 7175. Look for sellers up at 7183.50 and two way trade to ensue.
Hypo 2 stronger buyers press up to the 7200 century mark then sustain trade above it, setting up a move to target 7264.50 before two way trade ensues.
Hypo 3 sellers press down through 7100 setting up a move down through overnight low 7052.25. Look for buyers down at 7009.50 and two way trade to ensue.
Levels:
Volume profiles, gaps, and measured moves:
