What we witnessed Tuesday morning on the NASDAQ exchange was an attempt to break up-and-out of value.  It was accompanied with light volume and no follow-through.

The result?  We fell back into value.  Often times, once one side of a well-developed value is tested, we go and test the other side.

In this case, the other side is lower.  And below our well developed value is a slip zone all the way down to about 4880:

Before this can happen, sellers need to recapture 4928.75 and sustain trade below it.

Note: I am still short the NASDAQ, position trade, via $QID

Writer’s note: value, value, value

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NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, pressing up from the stable footing of the well-developed value we launched from Monday morning.

The economic calendar is light today—only a 2-year Note auction at 11:30am and a 5-year at 1pm.

Yesterday we printed a normal day.  The first 30 minutes of trade were so explosive, driving higher after a gap up to begin the holiday shortened week, that we never had a range extension for the rest of the day.  Instead, more than half the move was given up, intraday.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4961.  A probe below overnight low 4959.25 reveals buyers around 4955 and two way trade ensues.

Hypo 2 buyers work up through overnight high 4979.25 and make a run to test above Monday high 4994.50.  Look for sellers around 5000 and two way trade to ensue.

Hypo 3 strong sellers press down to 4937 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Tuesday, the first trading day of the week, gap up after an overnight session featuring normal range on abnormally low volume.  Price worked higher overnight, trading up beyond last Friday’s high and settling up near the Thursday high as we approach opening bell.

Last week began with a strong driver higher Monday which was rebutted by the afternoon when sellers stepped in.  The rest of the week was spent drifting sideways with a slight downward slip.  Here is the performance of each major index last week:

The economic calendar is light this week.  We have a reading of the Consumer Confidence at 10am.

Last Friday the NASDAQ formed a neutral extreme up.  The gap down was bought up but sellers pushed a range extension down by lunchtime.  However, buyers worked price back up through the entire range before end of day, closing near the session high.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4942.50.  From here we continue lower, down through overnight low 4940 before it becomes choppy two-way trade.

Hypo 2 strong sellers press down to value area low around 4920 before two way trade ensues.

Hypo 3 buyers press up through overnight high 4950.50 and begin probing up to new highs, taking out 4966.25 to target 4970 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Friday flat-ish, down a touch, after an overnight session featuring abnormally low volume on normal range.  Price held Thursday’s range in balanced trade along the low-end of value.

On the economic calendar today we have New Home Sales and the final December reading of U. of Michigan Confidence at 10am, then at 1pm the Baker Hughes rig count.

Yesterday we printed a normal variation down.  There was a morning drive lower followed by a second, initiative wave of selling.   Then, on the low-end of value a responsive bidder stepped in.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4936.25.  From there we continue higher, up beyond overnight high 4938.25 before settling into trade around the MCVPOC at 4937.25.

According to the CME, we close at the regular time today, and NASDAQ futures will remain closed through Monday in observance of Christmas.  Note: I will be updating the IndexModel ahead of closing bell (inside Exodus, grab your free trial now if you haven’t already) to determine whether or not to hold my position short via $QID through the holiday.

Hypo 2 work down through overnight low 4827.25 and test the Thursday low 4917, finding buyers just below it and settling into two-way trade.

Hypo 3 full-on liquidation triggers by first sustaining trade below 4917 then thrusting down to 4900.  If 4900 does not hold then liquidation down to 4879.75.

Hypo 4 strong buyers press to new highs, up beyond 4956.75 and sustaining trade above it to trigger a move up to 4971.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Thursday flat after an overnight session featuring normal range and volume.  Price briefly took out the Wednesday low overnight, tagging the Monday gap at 4939 before lurching back to UNCH.  At 8:30am Durable Goods Orders came in below expectations.

Also on the economic calendar today we have leading indicators at 10am and a 5-year TIPS auction at 1pm.

Yesterday we printed a very benign normal variation.  Morning selling led to a range extension down (sellers became initiative) however, their campaign was short lived, and by lunchtime we were back to flat on the session.

Heading into today my primary expectation is for sellers to work down through overnight low 4937.25 setting up a move to probe value area low around 4926 before two way trade ensues.

Hypo buyers work up through overnight high 4953 and have a go at new highs, a test up through 4966.25.  Look for sellers up at 4971 and two way trade ensues.

Hypo 3 strong buyers press up beyond 4977.50 and sustain trade above it, setting up an Obama legacy trend day.

Hypo 4 sellers sustain trade below 4925 triggering a liquidation down to 4900.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Wednesday flat after an overnight session featuring normal range and volume.  Price was balanced overnight, right along the top-side of our big value zone.  At 7am MBA Mortgage Applications came in better than last week.

Also on the economic docket today we have Existing Home Sales at 10am then crude oil inventories at 10:30am.

Yesterday we printed a normal variation down.  Price stayed inside Monday’s range after opening gap up.  A brief expedition to range extension down was quickly rebuffed by responsive buyers (responsive relative to the Tuesday open, initiative relative to the Monday close) and we ended the day back at session mid; just like Monday.

Heading into today my primary expectation is for prices to drift higher, up through overnight high 4960 and up to new highs.  Look for sellers up at 4971 and two way trade to ensues.

Hypo 2 stronger buyers work up beyond 4977.50 and sustain trade above it setting up a trend higher.

Hypo 3 sellers work down through overnight low 4950.25 and close the gap down at 4939 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range and volume.  Price worked up to the value area high overnight and is holding high value as we head into cash open.

The economic calendar is light today—only a 4-week T-bill auction at 11:30am.

Yesterday we printed an elongated normal variation up.  The more powerful rotations came to the upside, especially in the morning when a strong bid pressed the market higher for the first hour and a half.  Sellers were found just above all-time high, and after some indecisive action near value high, a second, initiative wave of selling pushed through.  It was, however, faded back higher by end of session.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4939.  From here we continue lower, down through overnight low 4938.50 setting up a move to test value low down around 4920 before two way trade ensues.

Hypo 2 buyers work up through overnight high 4953 setting up a breakout to new highs.  Look for sellers up at 4971 then again at 4977.50.

Hypo 3 strong buyers press to new highs, then sustain trade above 4977.50 setting up a potent, open-air trend higher.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Monday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight during a balanced session that held below the Friday midpoiont.

The economic calendar is light this week.  Today the only events are the Markit Service/Composite PMI at 9:45am, then both a 3- and 6-month T-bill auction at 11:30am.

Last week was bullish up until Wednesday.  After the Feds raised interest rates price became choppy.  Here is the performance of every major US equity index for the prior week:

On Friday the NASDAQ printed a double distribution trend down.  An early drive higher was sharply rejected, forming an excess high.  Then the rest of the day was spent methodically working lower.

Heading into today my primary expectation is for a push up through overnight high 4925.50 as we work back up to the MCVPOC at 4938.  Look for chop around this area that ultimately gives way to selling, back down to 4916 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 4916.  They then take out overnight low 4913.25 setting up a move to probe the Friday low 4904.25 and tag the 4900 century mark before two way trade ensues.

Hypo 3 strong selling down through 4900 and sustaining trade below it sets up a liquidation down to 4880 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Friday slight gap up after an overnight session featuring normal range and volume.  Price was balanced overnight and held inside Thursday’s range.  At 8:30am Housing Starts data came in way below expectations.

The only other economic event this week is the Baker Hughes rig count.

Yesterday we printed a neutral day—second one in a row.  Price opened gap up, extended higher, 1-ticked swing high (potential failed auction) before traversing down through the entire range, finding a bidder, and returning to the midpoint.

Heading into today my primary expectation is for chop and balance to prevail into the weekend.  Sellers work down into the overnight inventory and close the gap down to 4933.75, take out overnight low 4930.75 before finding bidders down around 4920 and two way trade ensues.

Hypo 2 buyers work up through overnight high 4948.25 and make a brief new high, up above 4961.75 before two way trade ensues.

Hypo 3 strong buyers press up through the highs and continue exploring higher prices.

Hypo 4 price sustains trade below 4910 setting up a liquidation down to 4900 then stretch target is 4880.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Thursday with a slight gap down after an overnight session featuring normal range and volume.  Price held Thursday’s range in balanced trade.  At 8:30am CPI data were in line with expectations and Initial/Continuing jobless claims were slightly better than expectations.

There are no other economic events of importance today.

Yesterday we printed a neutral day.  The gap up was faded lower early morning before markets went into a slow ascent heading into the FOMC rate decision.  Interest rates were lifted by 25 basis points by the Fed prompting a hard sell lower.  However, bidders were present to defend their conviction level from Tuesday and two-way trade ensued.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4931.50.  From here we continue higher, up through overnight high 4940, targeting 4950 before two way trade ensues.

Hypo 2 sellers work down through overnight low 4918 and target the 4900 century mark before two way trade ensues.

Hypo 3 strong sellers press down through the single prints, down to 4880 before to way trade ensues.

Hypo 4 strong buyers work up through all-time highs 4961.50 and continue exploring higher prices.

Levels:

Volume profiles, gaps, and measured moves:

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