Nasdaq futures are trading higher on the globex session. The buyers stepped in around 3am after defending the value area low of Monday’s cash session. Range overall on the globex session is on the high end of normal [1^st sig] as is volume. Oil is trading up into the open and we saw a positive earnings reaction from KB home this morning.

At 10am we have JOLTS, a low impact event. 2pm Monthly budget statement, and 5pm we have Fed speak from Kocherlakota. Tomorrow premarket we have WFC & JPM earnings and also Advance Retail sales, Fed’s Plosser, and MBA Mortgage applications.

The main feature of yesterday’s action that had me constructive was the b-shape of the market profile. This suggested a short term phenomenon known as a long liquidation. An early entrant pressured the market lower which forced longs into liquidating. Once that business was complete the market balanced and showed decent signs of excess(tails). You cannot see the tails as clearly, but the b-shape is quite evident on an old school MP:

Primary hypo is a 2-way open auction with big chop where sellers push into overnight inventory and test down to 4180 area. If no buyers than test down to 4176 area before we work higher to test Monday session high 4218.50

Hypo 2 is for buyers to thrust early and run us up the zipper and test Monday’s HOD 4218.50. Just above around 4224.25 I will look for signs of responsive sellers.

Hypo 3 responsive sellers reject the overnight move and sustain trade back inside the b-shape, below 4176. Then we test through to 4160 area and continue probing lower.

These levels are highlighted on the following volume profile chart:

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The Nasdaq futures were a sell overnight where we saw prices move lower from their closing print.  The overall volume and range were by no means abnormal, the sell flow managed to print about 20 points of range on about 30,000 contracts.  Sellers managed to take out Monday’s low print by a few points before finding responsive buying.  Since then we have seen buyers attempting to defend yesterday’s low at 4035.75.  Whether or not they sustain trade above this level into cash open is still up for debate.

Chinese “flash” PMI came in slightly better than expected and had little effect on equity future prices.  Eurozone PMI was mixed with manufacturing lower than expected and services a bit higher.  We are set to see our US PMI at 9:45 am today.  We also have Fed speakers Powel and George right around market open and Richmond Fed Manufacturing Index at 10am.

The major headline this morning is the US and allies launching airstrikes on Syria.  Expect headline risk to run high as this information develops.

Below we can observe the mature balance of the intermediate term.  After making a slight new high on Friday, prices came barreling lower through the VPOC at 4066.  This suggests a larger timeframe participant, someone whose timeframe is greater than the intermediate term, was motivated to take action and as a result we saw this directional move lower which disregarded these intermediate term levels.  Their actions abated late in the afternoon and we saw a modest response from the buyers.  My initial impression of the failed move higher is to suspect a failed auction.  The fast move away further supports that idea.  However, the sellers need to make a bit more progress to gain control on this timeframe.  Essentially, they either need to take out the price levels I have highlighted below or print a lower high and a lower low.  See below:

I have highlighted the short term levels I will be watching on the following market profile chart:

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