NASDAQ futures are coming into Tuesday gap down after an overnight session featuring elevated range on extreme volume. Price worked lower overnight, trading down near the gap left behind last Thursday before finding a bid just above it. Since then price has stabilized and as we approach cash open, price is hovering inside last Friday’s low.
US markets were closed Monday in observation of Dr. Martin Luther King Jr. Day.
On the economic calendar today we have existing home sales at 10am followed by 3- and 6-month T-bill auctions at 11:30am.
Last week markets rallied. The week began with Monday weakness that was bought but not with any sort of vigor. The vigor came Tuesday with a gap up and drive higher. Wednesday marked time before another vigorous round of buying Thursday. Friday the buying continued. Eventually it discovered responsive sellers and we settled into the weekend off the highs. The last week performance of every major index is shown below:
On Friday the NASDAQ printed a normal variation up. The day began with a gap up that selelrs pressed into. Said sellers were able to reclaim the Thursday range but could not close the overnight gap before initiative buyers (initiative relative to Thursday’s close, responsive relative to Friday’s open) stepped in. Said buyers then drove higher, trading up into prices unseen since 12/13 before finding responsive sellers. Said sellers took price back down to the daily midpoint. Buyers defended the mid and we ended the week up above it.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6792.50. I expect it to be a slow trek as buyers encounter supply at 6750, 6771, and again at 6787. Look for sellers up at 6800 and two way trade to ensue.
Hypo 2 sellers gap-and-go lower. Sellers take out overnight low 6721.25 early and it trigger a move down to 6705.25 before two way trade ensues.
Hypo 3 stronger sellers trade us down to 6675.50 before two way trade ensues.
Volume profiles, gaps, and measured moves:
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