Nasdaq futures are lower overnight. Reports of widespread failure by Bloomberg Terminals may be at least partially to blame for the selling which accelerated around 5am. One may think volume would be low if participants were without data, however quite the contrary, volume was elevated to second sigma as was the range.
CPI data came in lower than expected and so far we have not seen any reaction in price. At 10am The primary read of U of Michigan data is out. The primary read has often been a source of fast intraday Nasdaq moves. Also at 10am we have Leading Indicators and at 1pm energy traders will keep an eye on the Baker Hughes Rig Count.
Yesterday we printed an neutral day, the second neutral day in a row. Price settled right in the middle of the range however, which was unlike Wednesday’s neutral extreme day. Now, given the context of Wednesday’s neutral extreme, it is likely the initiative buyers seen Wednesday will be underwater due to this morning’s developments. Whether they can make a strong and aggressive responsive buy today will be telling. If not, we may see liquidation take hold.
Headed into today, we are priced to open on the low end of Tuesday’s range. The naked VPOC just above at 4386.25 is likely to attract price, as is the overnight gap up to 4414.25. However, today we are dealing with a pro gap, thus it will take significantly more resources to fill.
My primary expectation is for buyers to push into the overnight inventory and trade up to 4386.25 before finding sellers attempt to work down to the overnight low but struggle to take out 4363 and find responsive buying. Two way trade ensues.
Hypo 2, sellers gap and go lower, taking out 4363 early on and trigger a liquidation move down to 4337.
Hypo 3, strong buyers off the open work up to the range gap 4401 before finding responsive sellers who defend the range and churn us back down to 4386.25.
Hypo 4 full gap fill up to 4414.25 then a run for overnight high 4417.50 with a stretch target of the NVPOC at 4435.25.