NASDAQ futures are coming into Wednesday gap up after an overnight session featuring elevated range and volume. Price worked lower overnight, reversing much of the Monday morning gap higher. Then buyers aggressively defended an attempt back into last Friday’s range, sending the index spiraling higher. At 7am MBA mortgage applications came out lower than last week.
Also on the docket today we have crude oil inventories at 10:30am. The energy markets have been volatile alongside the drought-stricken middle east, so investors are likely to pay closer attention to the report.
Yesterday we printed a neutral extreme down. Price briefly went range extension up Tuesday morning after beginning the day with a two-way auction. Then, the entire range was reversed, pushing the index neutral. From then onward, and despite some attempts higher from the buyers, the daily midpoint was a wall. We closed near session low, earning the neutral extreme designation.
Heading into today my primary expectation is for sellers to press into the overnight inventory and close the gap down to 5733.50. However, an attempt down through Tuesday low 5729 is rejected by buyers, sending up up through overnight high 5741.50. Look for sellers up at 5744.50 and two way trade to ensue.
Hypo 2 buyers work up through overnight high 5741.50 and sustain trade above 5744.50 setting up a move to target 5758.75 before two way trade ensues.
Hypo 3 strong sellers press down through overnight low 5699 and target the weekly gap left open down at 5684.50 before two way trade ensues.
Volume profiles, gaps, and measured moves: