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Market Profile

Testing Bull’s October Conviction

NASDAQ futures are coming into the week gap up after an extreme overnight session.  Both range and sigma pushed beyond 3rd sigma as price pushed down to a new swing low before reversing.  The market then managed to trade up to the scene of our late-Friday afternoon breakdown (which also aligns with last Thursday’s low). The market profile footprint left behind looks overall balanced.

On the economic calendar today we have Labor Market Conditions Change data at 10am followed by a 3- and 6-month Treasury Bill auction at 11:30am.

Last week we started Monday with a big pro gap down.  By end of day Monday we found a strong responsive buyer.  He was faded for most of Tuesday during a balanced session.  Wednesday opened pro gap down again but was balanced with strong responsive buyers.  Thursday opened pro gap down and after a strong responsive buy, the session rolled over and closed on the lows.

Friday opened gap up and slowly trended lower to close on the lows.

Heading into today my primary expectation is for sellers to push into the overnight inventory and close the gap down to 4262.75.  Last Friday pushed into the October 2nd conviction (trend) day.  I expect buyers to defend this area.  However, I am looking for a move to take out overnight low 4226.25.  Look for responsive buyers ahead of 4188 and two way trade to ensue with strong responsive buyers stepping in.

Hypo 2 buyers use the gap up to force a short squeeze rally.  Look for a move to take out overnight high 4294 and target the 4300 century mark.  Then look for responsive sellers at 4308.50 before two way trade ensues.

Hypo 3 strong buy, take overnight high 4294 early and sustains trade above 4308.50 setting up a leg to target 4332.75.  Stretch target is 4348.

Levels:

01112016_NQ_MP

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Gap Up Leaves Behind Some Bearish Context

NASDAQ futures are priced for a pro gap up after a globex session featuring extreme range and volume.  Price spent most of the session balanced after a strong thrust higher early in the evening.  The action managed to take out the low printed yesterday, briefly, before buyers stepped in.  Swing low is rarely formed during globex, we have some bearish context left behind.  At 8:30am Nonfarm payroll data come out better than expected and 3rd reaction analysis yielded the buy.

Also on the economic calendar today we have Wholesale Inventories at 10am, Baker Hughes rig count at 1pm, and Consumer Credit at 3pm.

Yesterday price opened pro gap down and after buyers pushed a half-gap fill price rolled over.  The selling accelerated through the afternoon pushing us into a neutral print.  A few attempts at the short squeeze failed and we ultimately closed near session low earning the day a neutral extreme designation.

Heading into today my primary expectation is for sellers to work into the overnight inventory and trade down to 4328.50.  Look for responsive buyers here then a push to take out overnight high 4370.  Look for buyers to keep pushing and test above Thursday high 4395.75.  Expect responsive sellers just above Thursday high, around 4398.75, and two way trade ensues.

Hypo 2 sellers push down through 4328.50 setting up a move to target the 4300 century mark.  Buyers show up here but are ultimately overrun and we do a full gap fill down to 4287.50.  This sets up a move to take out overnight low 4281.  Look for responsive buyers at 4274.25 and two way trade ensues.

Hypo 3 sellers accelerate after filling overnight gap, trade down through 4274.25 to set up a move to fill the open gap down at 4261.75.

Levels:

01082016_NQ_MP

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Longs Liquidated in Extreme Globex Action

NASDAQ futures spent most of the overnight session trending lower after a series of events rocked the world.  There are rumors of at least 50 dead in a bombing in Libya, Police in Paris shot a man potentially wearing a fake bomb vest (poor fashion choice), and the Chinese stock market was halted for a second time this week after triggering a circuit breaker around -7%.  Both range and volume are extreme, volume is about as high as it gets.  Price pushed into the 4300 century mark which is a zone that was also resistance for several weeks back in late September, early October.  At 8:30am Initial/Continuing jobless claims came in worst that expected.

The economic calendar is otherwise open today.  Energy traders will be watching the 10:30am EIA Natural Gas storage reports.  Also remember we have Non-farm payroll tomorrow morning.

Yesterday we printed a normal variation up day.  Price started out pro gap down and buyers mounted an open drive higher.  After going range extension up by lunch, price faded back down near the session midpoint ahead of the FOMC minutes.  3rd reaction off the minutes was a buy, and after a small attempt higher price again rolled over but held the lows.  Late in the session we rallied back up into the upper quadrant of the day’s range.

Heading into today my primary expectation is for buyers to push into the overnight inventory and work price higher to target 4379.  From here look for supply to come in and two way trade to ensue.

Hypo 2 sellers drive off the open, working to target overnight low 4297.25.  From there look for a push down to target 4274.25 before two way trade ensues.  Stretch target to the downside is the open gap down at 4261.75.

Hypo 3 strong responsive buy surge takes price up through 4380 and sustains trade above it setting up a move to target 4400.  Look for sellers to reject price away from yesterday low 4400.75 and two way trade ensues.  Stretch target is a full gap fill up to 4447.

Levels:

01072016_NQ_MP

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Extreme Overnight Session Ahead of Busy Day

NASDAQ futures traded more than a 100 point range overnight (60 points is 3rd sigma) on extremely high volume.  The duration of globex was spent trending lower, pushing price down to levels not seen since late October of last year.  At 8:15am ADP Employment change came in at 257k vs 192k expectation, stronger than expectations, the initial reaction is buying.

There are several economic events scheduled for today.  At 10am the ISM Non-Manufacturing Composite will be released followed by 10:30am crude and distillate inventories.  The main news comes at 2pm, when The Fed releases minutes from their December meeting.

Yesterday we printed a normal variation down.  Price opened with a small gap up and was quickly sold lower.  In the early afternoon buyers put in a low, but a weak one, and we ended the day trading near the midpoint of the session.

Heading into today my primary expectation is for buyers to work into the overnight inventory a bit.  We are working with a pro gap, currently 86 points wide.  The half gap mark is around 4441.  Look for buyers to make an attempt into the Monday range at 4429.75 and responsive sellers to step in and reject the range around 4440.  From there look for price to trade lower but form 2-way balance ahead of the FOMC minutes.

Hypo 2 gap and drive lower.  Sellers take out overnight low 4386 early on setting up a move to target 4367.7.  Responsive buyers here are overrun as sellers target 4357.  Stretch target is the open gap at 4326.50 from 10/14.

Hypo 3 take out overnight low 4386 and find responsive buyers just below it setting up a tight-choppy range ahead of the minutes.

Hypo 4 V-shaped bounce.  Strong responsive buying off the open recaptures Monday’s range and sustains trade above 4432 setting up a secondary leg to target 4484.25.

Levels:

01062016_NQ_MP

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Key Turnaround Points for Tuesday

NASDAQ futures are coming into Tuesday down eight after an overnight session featuring elevated (but not extreme) range and volume. The globex session started out balanced before giving way to selling around 3:30am. Price worked down to test the value area high from yesterday where we found responsive buyers. Since then a strong rotation up materialized and we are trading in the middle of the overnight range.

The economic calendar is light today, with only some T-bill auctions (52-week & 4-week) occurring at 11:30am. I am noting these auctions because their health is important to the Fed liftoff story. Keep them in mind but also be aware that out on the horizon, tomorrow afternoon, we have the December FOMC minutes.

Yesterday we opened pro gap down and drove lower. Price managed to push below the composite VPOC at 4450. Responsive buyers showed up at the naked VPOC from back on 10/21 at 4432.75 (see yesterday hypo 3). Buyers managed to press up to new highs by close, resulting in a neutral extreme up print.

Heading into today my primary expectation is for buyers to press into the overnight inventory and close the gap up to 4504.50. From there look for buyers to continue on to take out overnight high 4523 which sets up a move to target 4536 before two way trade ensues.

Hypo 2 sellers push down to 4478, buyers defend this developing VAL setting up a move to fill overnight gap 4504.50 then target ONH 4523. Just above ONH responsive sellers step in and two way trade ensues.

Hypo 3 strong sellers reemerge, work down through 4475 setting up a move to take out overnight low 4466. Look for responsive buyers around 4447 and two way trade to ensue.

Hypo 4 full on liquidation. Take out overnight low 4466 early and press into 4447. Churn at the 4447 level gives way to more selling to test below Monday low 4429.75. Stretch target is the open gap down at 4398.75.

Levels:

01052016_NQ_MP

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First Day of 2016 Trade Is for Professionals Only

NASDAQ futures are priced to open pro gap down after an extremely abnormal globex session. Volume and range metrics are both running beyond 3rd sigma on trend down price action. Price managed to push near the low of December, set on 12/14 at 4471.25. The price action is being attributed to the Chinese stock markets being halted after trading 7% on their first session of the year.

On the economic calendar today we have ISM Manufacturing at 10am. Also released at 10am is Construction Spending (Nov, MoM). Also keep in mind the 11:30am the USA is auctioning 3&6 month T-bills.

Last week started out with fast selling which quickly dried up. By 11am the NASDAQ began auctioning higher. The strength continued into the close and led up to a pro gap up and drive higher Tuesday. Wednesday was a flat churn with a late-day liquidation.

Thursday was the last trading day of the week. Price opened gap down and two-way trade gave way to selling. We ended the week by printing a neutral extreme down.

Heading into today my primary expectation is for buyers to push into the overnight inventory a bit. Look for a push up to 4521.75. From here expect to sellers to show up and churn to ensue. Churn ultimately gives way to a second leg of buying up to 4535.75 before two way trade ensues.

Hypo 2 sellers push off the open to take out overnight low 4503.25 and give the 4500 century mark a test. Look for responsive buyers down at 4468.25 and two way trade ensues south of 4516.

Hypo 3 full on liquidation, gap and go down. Take out 4500 early and push into 4468.25. Responsive buyers are overrun and trade is sustained below 4466.25 setting up a secondary liquidation leg down to target the composite high volume node at 4450 then the NVPOC at 4432.50. Look for responsive buyers here but stretch target is 4421.25.

Hypo 4 the V-shaped gap fill. This requires major resources from buyers. Take out 4535.75 early and sustain trade above it, setting up a leg higher to target 4578.50. Sustain trade at these levels to set up a late-day push to close the gap up to 4591.50.

Levels:

01042016_NQ_MP

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NASDAQ Pro Gap Up After Neutral Extreme Action Yesterday

NASDAQ futures are priced for a pro gap up after an overnight session that featured normal range and volume. Price spent most of the session working higher, especially after European markets opened. Price managed to work into the upper quadrant of the 12/17 range before finding responsive sellers. At 9am the S&P/Case-Shiller Composite-20 came in slightly lower than expected. The initial reaction is slight selling.

Also on the economic calendar today we have the December Consumer Confidence read at 10am.

Yesterday we printed a neutral extreme up. Early selling pressure managed to push the session range extension down, but before lunchtime responsive buyers were on the scene and bidding price higher. By early afternoon buyers made a strong move up/away from the mid which set up a tight compression near session high. At the end of the day the market pressed neutral and closed near the high giving the day structure the neutral extreme naming convention and some directional conviction heading into today.

Heading into today my primary expectation is for sellers to work into the overnight inventory. Look for responsive buyers (responsive relative to the open, initiative relative to yesterday close) to show up around 4626. Then look for a move to take out overnight high 4649. After a two-way auction of the 4650 zone buyers continue working higher to target 4669.

Hypo 2 sellers work down through the entire gap fill but it takes time. First the market finds responsive buyers around 4617.75. These buyers are overrun, taking trade down to 4615. Then a move to take out overnight low 4610.50 sets up. Look for responsive buyers at yesterday NVPOC 4605.50 and two way trade ensues.

Hypo 3 strong gap and go higher. Price works up to 4669 early and sustains above it, setting up a secondary leg to target ATH high 4683.25.

Levels:

12292015_NQ_MP

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Bulls Playing for The Neutral Extreme

The NASDAQ is representing for the bulls today.  It has been the strongest index on an otherwise benign session.  But since it was range extension down before lunchtime, the best bulls can ask for here is a neutral extreme day.

After we tagged my fire level this morning (see hypo 2 from this morning’s report) the selling dried up and we started auctioning higher.  After a debate around the mid bulls went back up through initial balance high.

Typically (meaning with a high probability) a neutral day comes back to the mean before handling any other business.  Today however bulls are creeping in up here at opening swing low 4597 and we are having a debate at this 4600 century level.

On a slow day like this, when everyone is not taking advantage of this Monday we are blessed with, my primary expectation is for a close near the high–giving the day a distinct directional conviction to stay with into Tuesday.

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Calm Climate Heading into Monday

NASDAQ futures are priced to start the week with a small gap down after an overnight session featuring a normal range on normal volume.  Price managed to push down through the Christmas Eve range and the day prior but found responsive buyers ahead of the open gap at 4590.50.

The economic calendar is empty today.

Last week price was in grind up mode.  Last Wednesday we printed a normal variation up day.  During the thin Christmas eve trade price continued its grind higher.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4610.75.  From there look for a move to take out overnight high 4619.  Look for buyers to continue higher, taking out Christmas Eve high 4630.  Look for responsive sellers up at 4637 and two way trade ensues.

Hypo 2 sellers defend around 4611 and work lower to take out overnight low 4592.50 and close the Tuesday gap down to 4590.50.  Look for a continued move down to 4575 then responsive buyers and two way trade.

Hypo 3 strong buyer emerge.  Take out overnight high 4619 then 4637 early. Sustain trade above these prices setting up a secondary leg to target 4668.50.

Levels:

12282015_NQ_MP

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THE BIG SHOW

NASDAQ futures are up heading into a busy day.  The overnight action was balanced and occurred on normal range and volume.  Price worked up through the Tuesday range to briefly exceed yesterday’s high by two ticks before falling back into range.

The biggest economic event into year end is scheduled for 2pm today, when the Federal Open Market Committee is expected to lift interest rates by 25 basis points.  The event also has a post-press conference with Yellen scheduled for 2:30pm.  Today’s agenda is also spattered with medium impact events including Housing Starts and Building Permits at 8:30am, Industrial/Manufacturing Production at 9:15am, Manufacturing PMI at 9:45am, and Crude Oil Inventories at 10:30am.

Yesterday we printed a neutral extreme down, albeit an odd one with narrow range after a big gap up.  Nevertheless, this day type carried some negative directional conviction for the day-time frame participants.  Therefore the gap up this morning is a bit of a surprise.

Heading into today my primary expectation is for choppy conditions as the market digests all the morning news and goes into a holding pattern ahead of the FOMC decision.  Look for sellers to work into the overnight inventory and close the gap down to 4602.75.  Expect responsive buyers around 4600 and a move to briefly take out overnight high 4633.50 before falling back into range/chop.

Hypo 2 buyers take out overnight high 4633.50 early on and work up to target 4650 before two way trade ensues–leaving the overnight gap open while we await the 2pm rate decision.

Hypo 3 buyers sustain trade above 4650 opening up the air pocket up to 4672.

Hypo 4 gap fill accelerates as seller take out overnight low 4597 and test below Tuesday low 4587 to set up a gap fill down to the Monday close at 4560.50.

Levels:

12162015_NQ_MP 12162015_NQ_VP

 

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