If you have been sidelined in cash with risk capital you otherwise desire to be committing to equities, you may be coming into today with a shopping list of stocks.
Perhaps however, you should not simply buy at the open. If instead you have the option to watch the day develop, I have two downside targets in mind for adding exposure. The following prices are in reference to the
The first is 3460 and the second is 3453.50. These price levels represent targets algorithms will have in mind when they attempt to liquidate any holdouts to the long side. The market went up for quite some time, lacked follow-through conviction, and is now testing lower to gauge buyers’ appetite. A step taken by the market place to do this is pressing into existing longs to see if they liquidate.
The overnight market was on the move and slightly lower. The short term momentum favors seller control. Therefore we can measure their conviction verse the above to support levels. Should sellers abate early on, they may be waiting to see the auction first. In this event, look for their presence at 3476.25, the low volume node just above our overnight high, then 3483 which is yesterday’s VPOC.
Should strength rip through the market, my upside target is 3490.
I have highlighted these prices on the following Market profile chart:
The NASDAQ session was weak overnight prior to the early morning, when a rally ensued after buyers rejected an attempt to move price below yesterday’s RTH low.
Although we saw indecision in yesterday’s tape, there was no clear victory by the sellers. In fact, several footprints were left in yesterday’s profile which suggest buyers still hold control.
Yesterday’s profile has three bullish characteristics:
A buying tail
Range extension higher
A poor high
I have highlighted these features on the following market profile chart:
Tue Dec 10, 2013 8:24am ESTComments Off on Sign Posts to Guide Your NASDAQ Sentiment
Sellers pushed into the marketplace early this morning and continue pressing into the NASDAQ. Although a news bite may be the culprit, let us instead focus on the price action.
As I write we are making new overnight lows and they are carrying a bit of velocity. Should the algorithms sense buyer blood we may see trade down to 3511 – 3509.75 range, pressing any long initiated yesterday during RTH underwater.
It would make sense to test the sentiment of the buyers early on after they lacked any real follow through on their rally yesterday. Should buyers not show up at the above range our next levels of support are the LNV at 3505.50 then the value area low at mezzo-century mark 3500.
Below the mezzo century we open the door to a 12/5 retracement, when an open gap still exists down to 3478.25.
However, I am still calling for a rally off these highs. Overhead I will look for signs of selling around 3519 (VPOC and gap fill) and yesterday’s high of 3525.
These levels can be seen on the following MP chart:
Mon Dec 9, 2013 8:23am ESTComments Off on Powder Keg
The equity markets opened Sunday evening only to find buyers interested in increased exposure. Since then price has behaved orderly, consolidating the overnight gains and positioning price outside of Friday’s price range and value.
Should prices on the NASDAQ composite sustain trade over 3511 into the opening bell, we are opening out of balance, and the risk of a violent move is high. However, if I have correctly identified where were are currently trading within the sentiment cycle, we are deep in denial, which may produce muted trade.
The S&P is currently trading only two handles above Friday’s closing price which leaves the door open for a gap fill lower. Early on, perhaps even pre-market, we may see sellers coming in to close the gap. More important contextually than the gap however, is the low volume node we printed on Friday’s S&P volume profile at 1802.50. This price level set value area low several times in November and on Friday the action from buyers was dynamic enough to leave a low volume, fast moving footprint. Should the sellers quickly reject us back below this level and sustain trade for over an hour, we may be in store for further downside.
The NASDAQ is currently trading eight handles above its closing print showing greater strength early on. I will be watching the overnight swing low at 3506.75 to measure bullish appetite early on.
Overall, the action looks ripe for a rally however it is paramount we stay objective in our analysis and accept and define price levels which may negate our thesis. I have highlighted the low volume zone on the S&P on the following market profile chart:
Fri Dec 6, 2013 7:59am ESTComments Off on Focusing on The Auctions Only
The markets auctioned very methodical all week ahead of what is likely to be an interesting Friday. We tracked the control of sellers which began on Monday and came into question Wednesday with a violent neutral session. Thursday the market told us it accepted the current prices by balancing out inside of the large neutral day and is waiting for new information before exploring elsewhere.
Overnight the NASDAQ divided itself into three micro sessions by auctioning then breaking a bit higher, auctioning then breaking higher, and finally auctioning as the USA come online. The action overnight suggests buyers have the early edge. However they have also pressed us into very short term overbought conditions.
Taking a look at the longer term via value migration, you can see the relative strength of the NASDAQ verses the S&P:
Early on we have employment data which may better set the tone for our session, but the following reference points will still be relevant in determining whether the market is breaking out of balance to the upside or the downside:
The overnight markets were relatively solid for most of the session, but as USA comes online we are seeing selling pressure on the tape. The sell flow started at 7:30am and swiftly brought prices to new overnight lows and back to the bottom end of yesterday’s value area on both the S&P 500 and NASDAQ indices.
As I write, the markets are becoming oversold on a very short term horizon although given the velocity of this selling we may see follow though lower. The economic calendar is busy today including ADP employment data and International Trade numbers.
Putting all of that aside, we are coming into Wednesday and the sellers continue to retain control of the short-term auction. They gained control on Monday, showed follow though and initiative action Tuesday, and overnight they are again in control. This is all taking place in an aged long term auction controlled by buyers.
Focusing on the NASDAQ futures via /NQ, it will be interesting to see if the buyers can come in early on and work though this overnight gap. Buyers will be targeting a gap fill to 3475.25 and perhaps yesterdays VPOC at 3480. If buyers can turn momentum around, we have upside targets of 3484.25 (VAH) and 3489.25 (upper most distributions NVPOC).
If sellers continue to build on their momentum, they will look to trade through last Wednesday’s range and target the value area low at 3462. Not too far below this price is a string of single prints which indicates a strong buyer was present at the levels. Should that same buyer not present herself on a retest, it would suggest a shift in sentiment and downside action could accelerate.
I have highlighted these levels on the following market profile chart:
Tue Dec 3, 2013 8:27am ESTComments Off on Sellers’ Targets
The index futures are lower overnight, with the marquee S&P 500 weaker than the NASDAQ composite. Early on the momentum favors the short side, especially given the gap below in the NASDAQ. My expectation is for an early probe lower by sellers into the gap. I will look for buyers about half way into the gap from 3475 to 3473.75. Should they not present themselves, I expect trade down to 3472.25 (11/25 high) then 3469.25 (11/25 VAH).
At some point the gap trade higher may come into play, perhaps fueled by shorts in the hole. The overnight gap higher target is 3483.50. If the algorithms decide to run stops on any newly minted shorts, my algo upside target is 3489.50.
Long term auction is still in the control of the buyers but is aged. Yesterday was controlled by the sellers, and overnight the sellers retained control.
I have highlighted the day how I envisioned it above on the following market profile chart:
Mon Dec 2, 2013 4:47pm ESTComments Off on Seller Took Control Today
On the day timeframe, we saw action that suggests the sellers gained control of the tape. It started with the open where sellers printed a wick on the top end of our NASDAQ profile. Looking at the bar chart the print has a smack of euphoria. From there came several subtle warnings as the tape went mostly flat. It began to feel like sellers would fail [again] to roll the tape over. Every time inventory became too short in the futures, a rapid squeeze would develop. However, they never made new swing highs. Then after 3pm the sell flow came back in and closed us out near the lows.
It important to keep in mind we are still in an uptrend and tomorrow has a hearty POMO on tap. However, should that liquidity be absorbed and price continue lower, we may have a swing high in place.
Early on I sold out of AAPL, Z, and BZH. I did not like how the puzzle pieces representing housing looked during my weekend analysis so I cut. AAPL had just made its biggest four day move in the last six months and I wanted more cash. I scaled off a small piece of my GOGO, sub thirty, regretfully, as 30 was my target on the day. I sold NUGT for obvious reasons (it was getting pulverized) and I sold an old holding in O, because it looked weak.
My only buy today was of WBMD. I chased a bit, thus I left room to add if need be.
The net of my actions raised cash to 21% after being 100% long into the weekend. Call it what you will, I want more cash on hand into what may be a challenging month.
CREE started printing an inverse head-and-shoulders reversal pattern while its small cap counterpart RVLT struggled. OESX took a minor beating too but may begin consolidating which would entice me to finally get long the name. LEDS looks to have printed a bearish engulfing candle on the daily chart. Overall, the LED industry is still a mixed /weak basket of securities.
TSLA is getting a little dangerous looking and needs to find some buy flow soon. It looks to my eye to be setting up for another leg lower. Elon has a missile launch scheduled for tomorrow. Perhaps his motor stock will launch also. TM is promising to bring fuel cell tech to Japan by 2015 and Europe and USA by 2016. That means Elon has 2 full years to continue disrupting old auto. Tick tock Elon, keep making moves.
Shippers, you know them, you love them, and you hate them. This trade has been setting up so slow. It wants to lull you into a trance so you bail out of boredom then SPLASH, swing highs. It is still tough to get excited when I view my big shipped position.
Social media continues looking weak and there were reports of heavy put volume in crowd favorite FB. Overall sentiment continues to be bullish and that never bodes well for higher asset prices. For now, YELP continues to find buyers at the 99ema. If TRIP confirms lower tomorrow it sprung a nasty bull trap on speculators.
I would like to see some panic tomorrow, for olde time’s sake. Wouldn’t it be nice to get our one or two mandatory days of terror out of the way early? That way we can focus on gluttonous buying for the remainder of the year.
The chicken trade does not appear complete. I may need to reenter for the great ARISE.
The sellers have won the day. Two weeks back they won Monday-Wednesday only to get BTC’ed Thursday and Friday. Take todays win by the sellers in context.
Mon Dec 2, 2013 8:20am ESTComments Off on Morning Index Glance
The NASDAQ continued displaying relative strength verses the S&P 500 overnight, albeit mildly. The composite index was able to make new swing highs during the overnight session where sellers were quick to greet the move.
As we work into the early hours of USA time, prices have balanced out and are slightly higher than last week’s close.
During today’s session, I am interested to see whether or not the lagging S&P breaks recent lows or instead continues consolidating/grinding higher. Put quite simply, I will be monitoring the 1800 price level. Should we sustain trade below 1800 for a prolonged period of time, I may reduce select long exposure.
I do not want to see the NASDAQ (as represented by the /NQ contract) below 3488 for a prolonged period either.
I have highlighted the levels I will be observing on the S&P today on the following market profile chart:
