Like flipping a switch, the overnight volatility we’ve experienced for weeks is gone. NASDAQ futures traded on normal range and volume overnight on a session that was contained inside Monday’s range. Price worked slightly lower but as we approach cash open the market is right around Monday’s MID. At 7:30am Trade Balance data came out slightly below expectations and the initial reaction has been mute.
We have no other economic events on the calendar today. The market will be left to discover prices and balance on its own.
Yesterday we printed a double distribution day. It was not really trending price action but instead we saw a p-shape profile form atop a normal distribution. The P-shape suggests a short squeeze occurred late in the session.
Heading into today, my primary expectation is for buyer to work into the overnight inventory and close the gap up to 4312.25. From there they target overnight high 4314. Sellers defend around the 4315 level and we churn and chop before continuing higher to target 4320.25 then the open gap up at 4341.25.
Hypo 2 sellers work in around the gap fill/overnight high 4312.25 – 4314 and roll price over. Price works down below Monday’s low 4279 and targets the weekend gap fill down to 4261.75. There’s a globex distribution down to 4253—if sellers can push below it, they open up the door for a fast liquidation down to 4200. We may see a false move down into the slip zone where buyers defend 4244.
Hypo 3 sellers push off the open, leave the overnight gap open, and work down below Monday’s low 4279 and targets the weekend gap fill down to 4261.75. Then it is eyes on the globex distribution down to 4253—if sellers can push below it, they open up the door for a fast liquidation down to 4200. Again, we may see a false move down into the slip zone where buyers defend 4244.