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Tag Archives: $COMPQ< $NDX

Focus on The Auction

Please keep your thoughts and prayers with the friends and families affected by the senseless terrorizing of Brussels.

See more: 28 Killed, Scores Injured in Suicide Attacks Across Brussels

NASDAQ futures are set to enter the session gap down after an overnight session featuring normal range and volume.  Price briefly exceeded yesterday’s low before coming into balance at the apex of a multi-day value formation [see market profile image below].

On the economic calendar today we have House Price Index at 9am, Markit Manufacturing PMI at 9:45am, and a 4-week T-Bill auction at 11:30am.

Yesterday we printed a neutral extreme up.  A choppy open gave way to selling, albeit briefly, which pushed the market range extension down.  Moments later bidders arrived and worked price back up through the entire daily range, eventually closing the day out near the highs.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4416.25.  This puts us in range to test above overnight high 4420.50.  Look for responsive sellers up at 4424.50 and two way trade to ensue.

Hypo 2 sellers defend the 4400 handle and work price lower to take out overnight low 4383.75.  Look for responsive buyers around 4370 and two way trade to ensues.

Hypo 3 strong buying pushes up through 4424.50 and sustains trade above it, setting up a secondary leg higher to target 4445.

Hypo 4 selling liquidation takes hold.  Take out overnight low 4383.75 early then sustain trade below 4370 setting up a move to target 4345.



Volume profiles, gaps, and measured moves:

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Now We Wait

Nasdaq futures are lower as we head toward cash open. The range and volume associated with the move are about as normal as it comes, both falling right in the middle of their respective Gaussian distributions. Price managed to take out yesterday’s cash high 4175.25 for a while but eventually traded lower. Yesterday evening’s big surprise came from NFLX earnings, which propelled the stock much higher in after-hours trade. The Presidential State of The Union had little effect on index price. Just ahead of the 8:30am housing-type data we saw a run-up in prices which has subsequently faded off/traded flat since.

Yesterday we were gap up to start the week (on a Tuesday) and subsequently faded lower for much of the morning. It was only when price attempted to enter the value zone established when combining last Thursday and Friday that we saw a sharp responsive buyer. Their behavior was strong enough that it reversed the auction process in the opposite direction and we ended the day with a Neutral Extreme print.

The Neutral Extreme print carries strong directional conviction, second only to the trend, or, conviction day. Contributing to the validity of this structure was an end-of-day VPOC shift to the high end of the range. Calling the strength into question is cumulative delta, which, could not manage to stay positive.

Heading into today, my expectation is for buyers to push early on to close the overnight gap to 4167.25 then struggle a bit with 4171.50 before working to take out overnight high 4178.50 and targeting 4184.25 where we see sharp responsive selling.

Hypo 2 is sellers on the open work down to take out overnight low 4149 and target 4146 – 4142 where we see responsive selling and then an attempt at filling the overnight gap.

Hypo 3 is a stronger buying drive early on that takes out 4184.75 early on and opens the door to run up the zipper to 4229.75.

Hypo 4 is strong sellers take out 4142.50 and work back down into Tuesday’s lower distribution and target 4127.50.

These levels are on the following charts:



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Now Is No Time for Complacency

Equity markets pressed higher at 8:30am after the US posted stronger than expected NFP data to the wires.  Just after the bell at 10am we have Wholesale Inventories and Trade Sales and at 1:20pm Fed’s Lacker is delivering a speech on his 2015 economic outlook.  We also have two ongoing hostage/terrorist situations in Paris.

Prices are still on the move in the globex market but as we approach cash open we are trading right around yesterday’s high of the session.  We spent the overnight session trading above the mid of yesterday’s big range before taking out the highs on the NFP data.  The two pushes above Thursday’s range have found responsive selling.

Yesterday the market went gap up and started the session above the prior two day’s ranges and half-way into Monday’s range.  Shortly after the open a strong driver came in and pushed the market higher.  Toward the end of the session prices came into balance resulting in a P-shaped profile.  This type of print suggests a short squeeze took place.

In the context of a downtrend, a P-shaped short squeeze profile often occurs at-or-near the end of a counter rotation higher. However our current context is not a downtrend.  Our current context is intermediate term balance and it is comprised of all trade dating back to October 31st, see daily chart below:


For high level prices to keep in mind, I am sticking with the daily chart and highlighting the key Nasdaq levels below.  Note the three distinct volume distributions separated by two volume pockets.  This is vital information while navigating this big chop.


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Gapping Into The New Week

Nasdaq futures are set to gap a bit higher into the new week after spending most of the globex session working higher.  There were no major news developments over the weekend and the economic calendar is rather quiet this week with the most notable event being Wednesday’s release of the FOMC minutes and also a speech from former Fed chair Ben Bernanke.  Also Thursday we will here the BOE Rate Decision and Asset Purchase Target as well as US Continuing and Initial Jobless Claims.

Last week we saw a spike in volatility on the Nasdaq index where ranges increased.  This could be re-balancing activity as the quarter transitioned.  Solidifying this idea was the general lack of geopolitical activity occurring amidst the move.  The only real catalyst in the news was Ebola.  What we do know is a larger timeframe was at work most of last week and might continue to be active this week.  Overall the long term timeframe is bullish-to-indecisive.

The intermediate term auction is printing a series of lower highs and lows which suggests seller control.  However, we had a strong bounce Thursday which carried over into Friday and this morning which has this timeframe back inside its larger balance.  Beneath current prices is an air pocket from when prices quickly moved.  I have noted the key price levels I will be observing below:


Short term we are rallying after finding a strong buyer Thursday afternoon.  The P-shape of Friday’s profile suggests participants were not rushing to initiate fresh risk into the weekend.  Instead the early rally only modestly extended and then came into balance.  I have highlighted the short term levels I will be observing on the following market profile chart:


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