Hey, A Normal Overnight Session

My expectation heading into the week was for volatility to be low in the beginning of the week. And while most other indices saw volatility decrease, the Nasdaq has been ripping around, especially overnight.

However volatility receded during this morning’s globex session, and we’re heading into cash open with a normal range and volume overnight session in tote.

This is a slow week for economic events, but the pace will pick up a bit on the tail end of the week. At 7am we had MBA Mortgage Applications, at 10:30am Crude/Gas Inventories, and at 2pm we have a Monthly Budget Statement. Tomorrow morning BMO we have Advanced Retail Sales.

Yesterday we printed a neutral day, and nearly a neutral extreme day. The variation that qualifies a neutral day as extreme, at least in my unwritten book, is closing in the upper quadrant of the day’s range. Neutral days feature a range extension on both sides of the initial balance and tend to occur at-or-near inflection points. The session also printed a healthy-looking excess low that may stick for the remainder of the week.

Heading into today, my primary expectation is for seller to push into the overnight inventory and close the gap to 4431. From here, it’s not a big distance to take out the overnight low 4430.50. Look for responsive buyers at 4411.50-4407.50 and two way trade to ensue, south of ONH 4451.75.

Hypo 2 buyers gap-and-go higher, instantly leaving unfinished business in their wake, to take out overnight high 4451.75 and continue exploring higher to target 4480.

Hypo 3 sellers push down through 4407.75 setting up a test of yesterday’s low. Look for responsive buyers from 4387.25 – 4379.

Levels:

The neutral day strikes again! As a reminder, a neutral day is characterized as both the high and low of the first hour of trade (initial balance) being breached. They’re somewhat rare, 1-in-5 days are neutral, and they often occur at-or-near inflection points.

They always make traders boil. The indecision, it’s just too much to bear.   Higher time frame participants, players with resources well beyond the home gamer, duke it out for control of the financial field. Their footprints are a mess of wishy-wash aka the neutral day.

So if you’re feeling a bit charged, like you want to choke computer monitor, you’re likely not alone. However, to transcend such emotions would be a strong step in the direction of being a consistent trader.

Be cool baby.

We squared up the last local gap opening yesterday during the selling. 4424.25 was left behind on May 13^th. Price visited it yesterday and bounced hard.

All that’s left now are overhead gaps. Check out the below chart, sporting 5 open gaps up above. These may start attracting price:

Nasdaq futures are lower heading into Tuesday on above average range and volume. The session was dominated by sellers who took out yesterday’s session low and continued pushing lower, well into the range from 05/12.

Scheduled Economic events aren’t the likely catalyst to this selling. It appears to be related to the ongoing discussions between Germany and Greece. Today is another quiet economic day for the US—at 10am we have Wholesale Inventories.

Yesterday we came into the week gap down and proceeded to push lower for most of the session. Price travelled down into the 5/13 range and closed an open gap we had down there before finding responsive buyers. The strong rotation off the low was faded into the bell and led to continuing sell flow overnight.

The higher time frame action resulted in some ugly profile prints above, and it will be interesting to navigate these footprints, to say the least.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and close the gap up to 4433.75. Look for buyers to continue higher to take out overnight high 4441.25 and test the 4450 mark.

Hypo 2 sellers push off the open, take out overnight low 4403.75. Look for responsive buyers form 4387.75 – 4379.

Levels:

Today was nearly a trend day down. It was the laziest trend day I’ve ever seen, and it only happened in the Nasdaq, so it lacks the shine of a real trend day.

Yours truly also lacks shine. I’m like an old penny.   I no longer have time for mischievous stocks like HABT and BABA—both were axed today, as small gains, gains far too miniscule relative to the risk they subjected me to.

They had their chance, for glory, they blew it. They sat around in a teenage malaise, too lazy to carry on with chores and too weighted down by society to conform to the general population. To hell with these adolescent games, I want old man stocks.

Heading into June I want the oldest man position I can find. The longer their tooth, the more they appeal to me. I am drawn to their heavy musk scent and bitter disposition.

Here’s my old man watch list: PGR, CSX, DOC, NRG, and AWK

Now get off my lawn or I’ll make you fetch a Woerther’s from my front pocket.

The algos came out hunting longs this morning. They pushed down into the Friday stick save to see if buyers mean business.

So far, the push managed to liquidate some longs, but no real OTF order flow has been motivated by the move. The result? A b-shaped long liquidation profile and a nice, long, pole.

I know you like pole, I do too.

Check it out:

The risk here is the thin nature of the below structure. So if the pole climb starts going south, don’t overly commit to it. CUT IT.

Nasdaq futures are heading into the week balanced and compressed. The overnight session has so far been a narrow (but normal) range on normal volume. The economic calendar is light this week and today in particular only has one low impact release—at 10 am the Labor Market Conditions Change.

Aside from headline risk, that essentially leaves the market to its own device.

Last week we came in ambitious, gap up, and quickly eroded the gap to kick off 3 days of chop. Toward the end of the week sellers worked us lower until we found a sharp responsive bid Friday morning. We closed out the week grinding sideways.

Interesting to note, last week Monday we printed a normal day—we haven’t seen this print in quite some time. It suggests strong OTF presence early in the session, but no conviction follow through afterwards. The footprint it left behind suggests higher time frame selling that was absorbed well for much of last week.

Heading into today, my primary expectation is for buyers to work the market higher. Look for an early move to take out overnight high 4483.25 followed by a gap fill trade up to 4497.50 with 4508.25 as an upside target.

Hypo 2 buyers push up to 4497.50 then stall out and two way trade ensues with a range of about 4500 to 4473.

Hypo 3 sellers work lower, take out overnight low 4468.75 and test below Friday’s low 4449.25.

Levels:

Navigating the endless supply of statistics and data points can be daunting. I love the idea of a one liner, after consume a feast of data. You’re busy yes? I’m busy too, yes yes?

I take 100s of charts, signals, models, economic events, and commentary and distill it down to one potent shot—for the executive types.

This was last week’s thesis:

Bias score 3.25, Medium Bull. Look for bullish inflows this week with the possibility of weakness on Thursday/Friday. June kicks off with a busy economic calendar and is a quarter-end month which may cause erratic behavior as it matures.

I can’t always nail them, but envisioning how the market may play out is vital to trading. I have kept the processors overclocked all weekend, RAM PEAKED, to bring this week’s strategy session. It should be hitting sub boxes shortly.

Take your sunglasses off and listen to me. You need to see me so you can hear me, and you need to hear me because I have something important to tell you. Investors worldwide came into the week hyped-up on summertime vibes.

Machines, relegated to the confines of dark rooms and air conditioning, felt no such vibes. They merely sensed the collective enthusiasm, and systematically sucked the excess air from the market.

Enjoy your weekend!

It would take a potent algo strike driven by nothing less than a fantastic rumor about Tim Cook and Larry Page getting married to salvage the dead premium in my Apple/Google lottery.

Investors have no appetite for the big names, they want the speculative fireballs—a different one is set aflame hourly by the Pelicans. You may think I’m sulking into the weekend like an injured duck, rattled by my misstep. Nonsense.

I love what the market has accomplished this week. Over two weeks ago I said this range might take a while. And it has. Sellers won the week—barely. Rose colored sunglasses has been negated two times because dips are being bought.

We have entered the grind mode. You can either be the meat, or the machine. Nothing was done today except to procure shares of PGN. Leave it alone, it’s mine, for the win.