Nasdaq futures went on a ride overnight where both the volume and rang exceeded second sigma. During the hour and a half ahead of closing bell price started selling fast and on volume. The abnormal globex session continued to see selling, fast at times, which pushed below the prior (3/13) swing low before finding buyers.
Once it found buyers the auction reversed, and particularly after midnight price began moving upward with speed. The action nearly went round-trip as we head into cash open. And this morning like likely to be a busy one.
At 8:15 the ADP Employment Change data was weaker than expected. This news was met with a buying reaction. Also on the agenda today is Markit Manufacturing PMI at 9:45am, ISM Manufacturing at 10am, Fed’s Lockhart talking monetary policy at 10:30am, and oil/gas inventories out at 10:30am as well.
Turning to the market profile chart, the carnage of last night’s session revealed a territory where buyers are being aggressive. Just below 4285 buyers have demonstrated aggressive control. Should that price level trade again today, I would expect a similar response, otherwise I would deduce a material shift in context has taken place.
Price is currently pinned within a well-defined value area dating back to 3/26. Essentially, how we break from the 4324 – 4305 range will determine direction in the short term.
Heading into today, my primary expectation is for buyers to attempt to push back into Tuesday’s range (4320.75) and claw back into the value area up at 4350. However I anticipate responsive sellers will defend this region.
Hypo 2 is seller push off the open to 4305 where responsive buyers step in and we stick in the 4324 – 4305 range.
Hypo 3 is sellers blow through 4305 to set up a test of the responsive buying zone below 4285. If buyers do not defend we could see a fast flush.
Hypo 4 is buyers reclaim 4350 and continue pressing higher to target 4362.
Levels are highlighted below: