Yesterday afternoon we started to see a behavioral shift from the marketplace. The Nasdaq slowed down and flagged about, much like it did last Friday. The violent waves as we explored the southern tip of the charts opened up to a peaceful, calm, quiet pond. Whether this behavior sticks is unknown but the change has so far carried over into Globex. Overnight the Nasdaq traded on the low end of its normal range on normal volume. Prices drifted above yesterday’s cash highs briefly before finding responsive sellers.

Last night the biggest post-earnings price action was seen in SBUX which traded higher after reporting. At 8:30am we had Chicago Fed Activity and it brought some selling in. At 9:45am we have Markit PMI stats set for release. This announcement shortly after the open may induce some early chop. We also have Existing Home Sales and leading indicators at 10am.

Yesterday was the third straight day of advance in the Nasdaq and price action tends to become a bit rocky on the fourth session. However, bulls have done well to negate the intermediate term seller control, pushing us back into a more neutral-to-bullish stance. We are currently trading in the upper pocket of our triple volume distribution, see below:

Drilling a bit closer to the action, we can see prices are coming into the lower end of a large balance area above. It makes sense to expect some overhead supply in this region. Given the pocket-nature of our current trade location, we might still see some speed in the market.

Early on, I am expecting a choppy open auction, inside Thursday’s range before buyers make an attempt at the overnight high 4275.25. Not far above there I will be looking for signs of responsive sellers who work us back below Thursday’s close 4266 and choppy-two way action takes hold.

Hypo two is sellers a bit more aggressive on the open, pushing us over the ledge at 4258.25 and sliding us down through most of the afternoon push higher to test it’s starting point down at 4235.

Hypo 3 is strong bulls push up through 4277.75 and begin exploring the upper balance zone.

These levels can be seen below:

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Nasdaq futures are higher overnight on a slow-grind type session of trade. As we head into cash open sellers are recapturing some of the progress. The gap up to start the week has been a common feature the last several weeks; a common feature which gives way to selling. Whether that continues to be the case this week will be interesting to observe. Range is on the high end of normal for a globex session and volumes are running in the 2^nd sigma.

At 10am we have the NAHB Hosing Market Index as well as Fed’s Powell speaking. The housing data may carry an elevated impact on market prices after the weak showing from the Residential Construction industry last week. Several of the premarket earnings came in well. After hours, two of the majors we will hear from are IBM and NFLX. We also have a Presidential State of the Union Address set for 9pm. More housing stats are set for release in the premarket tomorrow.

Prices are trading inside a big area of acceptance currently, the microcomposite VPOC sits right at 4144.50. These high-volume areas tend to produce murky, choppy trading action. On either edge of this value we have volume pockets which are where the greater opportunity for trend-like behavior resides. Overall, the intermediate term timeframe is neutral-to-bearish. See below:

Short term we are gap up with some magnets below. Early on my expectation is for sellers to push into the overnight inventory and take us back to the MCVPOC at 4144.50 and continue lower to close the open gap down to 4134.75. I will look for signs of responsive sellers here (responsive relative to the overnight session, initiative relative the Friday) who work toward taking out the overnight high 4168.

Hypo 2 is buyers enter aggressive early and take out overnight high 4168.25 and continue higher to 4184 and possibly trend through that area.

Hypo 3 is sellers close the overnight gap 4134.75 and continue lower to 4120 area. I have highlighted these areas on the following market profile chart:

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Nasdaq futures are lower overnight and as we come into cash open price are hovering just below Thursday’s range. Volume and range remain 2^nd sigma elevated as the aftershocks continue to rip though global markets after an unexpected move from the SNB.

We came into the globex session with sellers pushing and the continued to do so into the afternoon and evening yesterday. INTC earnings were inline yesterday but shares still traded lower which may have contributed. Price pressed into the open gap from 10/27 before finding responsive buyers ahead of a closing of the range gap. Buyers pushed up but were unable to reclaim Thursday’s low 4077.75. We then revisited, but did not take out, the globex lows giving the session a weak looking low.

At 8:30am CPI data brought some buyers into the market who again struggled to reclaim Thursday’s lows.

We had Industrial/MFG production numbers out at 9:15am. We also have U of M Confidence at 10am, Fed’s Williams speaking at 11am, and Fed’s Bullard set to speak at 1:10am. The markets are also cruising into a long weekend as they will be closed Monday in observation of MLK.

Yesterday’s session featured sellers continuing to control the action. There was an interesting shelf formation at 4106.75 which served as a pivot for much of the session. Sellers eventually claimed victory of the area. Early on my primary expectation is for buyers to work into this overnight (short) inventory and close the overnight gap to 4089 to target the VPOC at 4095.25. There I am looking for responsive sellers to step in and continue driving lower. A return to the scene of the CPI bounce at 4061 puts us at the overnight midpoint. From there we continue to take out overnight low 4041.50 and close the range gap to 4040 then the full gap to 4033.

Hypo 2 is sellers drive off the open and run into a bit of demand at 4061 but overrun it and go fill the gap at 4040 then 4033 and overshoot to tag the NVPOC at 4028.

Hypo 3 is sellers early who are defended away above 4061 and buyers push the gap fill and retake the shelf pivot at 4106.75 to set up another leg higher.

You can see these price levels below:

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Volume and range shot well beyond second sigma overnight. This is a clear signal that what you are seeing taking place in the markets this morning is anything but normal. The primary driver of this volatility was forex macro moves resulting from an unexpected move by the Swiss National Bank.

Also occurring overnight was a move higher in oil. This morning the markets are dealing with more earnings from big banks who one after another are seeing share prices lose value post earnings. BAC is trading lower as is C although Citi is currently holding its prior lows.

At 8:30am the economic data including initial/continuing jobless claims, PPI, and Empire Manufacturing brought in some buyers who were quickly faded. This afternoon after market close we will here from INTC while the entire semiconductor industry teeters on the edge of a breakdown. We also have many more banks set to report tomorrow morning and CPI before market open.

Turning our attention to the auction, we can see some weak shelving occurring right at 4106.75. This level will be a big tell today. My initial expectation is we ‘spill over’ the shelf which opens the door for a test of the overnight lows which puts us in range of testing the prior swing lows and the Nasdaq on the cusp of breaking lower. See the context below:

The intermediate term shows sellers controlling the market.

Yesterday the market continued trading lower until we closed to open gap from 01/06. Once we hit these levels a sharp buying response took hold and saw some continuation off the value zone around 4118.75. Buyers were unable to push through the early highs of the session during the afternoon ramp but did see their progress carry through into the overnight session.

The overnight session carried over 100 points of range and as we approach cash open we are trading right near the midpoint of that range. Early on I am looking the yesterday’s VPOC at 4138 as a short term pivot. If sellers can sustain trade below this level that adds confidence to my primary expectation for trade to take out the market profile shelf at 4106.75 (seen above).

Hypothesis 2 is strong buyers off the open who take out yesterday’s session high 4159 and continue probing higher into the volume pocket at 4171.50 and a continued auction higher to target overnight high 4190.

Hypo 3 is a slow open auction inside yesterday’s range and then 2-way chop between 4171.50 and 4118 which eventually gives way lower during the lunch hour.

I have highlighted these levels on the following volume profile chart:

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Nasdaq volume and range went 2^nd sigma overnight as the index traded lower for much of the session. As we approach cash open prices are below Tuesday’s range and we are in a “pro gap” type environment. The selling accelerated at 8:30am when weaker-than-expected Advance Retail Sales data hit the wires. We also had an corrective-type event in copper prices, the Japanese Yen is very active, and JPM missed earnings. WFC is trading lower premarket as well after reporting earnings.

Today we have crude oil inventory stats out at 10:30am. The weekly report is likely to be closely followed by all speculators as the commodity continues to correct lower. We also have Business Inventories at 10am and the Fed Beige Book at 2pm. Premarket tomorrow we will hear Continuing/Initial job claims and also earnings from BAC and C.

Yesterday prices opened gap up and we had an opening drive higher. After a strong first hour of trade buyers pushed us above the IB and we unable to test Friday’s high. The lack of order flow above the high was ominous and we quickly fell back to the daily mid. From there buyers were unable to defend and we gave back the entire opening drive and then some in a large impulse-type move. The overall print was a neutral print, perhaps barely able to classify as a neutral extreme.

The overnight session looks like a completion of the impulse wave. Early on my expectation is for buyers to push into the overnight short inventory and test Tuesday’s session low 4126.75 and likely push into the range a bit up to the LVN at 4138. From there I expect responsive sellers will step in and continue pressing lower to close the open gap at 4102.25 and test recent swing low 4082.

Hypo 2 is an open drive down. The risk of a drive is elevated given the recent price action on open and how we are out of balance to start the day. Drive down looks to test recent swing low 4082 early and push through to test 4069 then 4053.

Hypo 3 is a stronger than expected open which takes out the LVN at 4038 and sustains trade above it. This type of action likely builds into a full gap fill up to 4158.75.

These levels are highlighted on the following profile charts:

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If you go back and read my recent 2015 predictions you can find mention of a Euro-zone based negative news cycle. I suppose I was not expecting it to hit on the 5^th day of the year, but these are the facts on the ground. We have an important economic release at 10am today (ISM Non-Manufacturing Composite). Keep in mind tomorrow afternoon’s FOMC Minutes too. These could lead to some choppy-directionless trade.

Heading into US cash open the Nasdaq futures market is flopping around the unchanged line after a busy evening. Volumes are elevated but normal and the price range was contained to the lower half of yesterday’s RTH range. The primary feature of the overnight session was a strong range rotation that occurred from 5:30am to 7am.

Sellers took us back to the scene of the crime yesterday while extending their down-day winning streak to four days. The gap left behind after the Fed rate decision in December was filed before we way signs of responsive buyers coming in. Heading into today’s session it will be interesting to see if sellers are able to take out yesterday’s lows and continue probing into large daily session from 12/17.

My primary expectation is for a choppy open, likely an open auction in range then a push higher to test 4167. This level was a big battleground yesterday but eventually resistance. If we can sustain trade above it then I will look for a test of the overnight high 4172.50 then MCLVN 4179. Any trade sustained above 4179 may signal a shift in the character of the auction from short term seller controlled-to-buyer controlled.

Hypo 2 is a push lower toward the overnight low 4149. There is a big high volume node just a tick below yesterday’s session low at 4144.75. The area was met with a buyer response yesterday and returning to it would likely mean we push through HVN and test the other side of this value which is 4135.25.

Hypo 3 is an early drive higher that spikes through overnight high 4172.50 and tests 4179.00 early. We find responsive selling higher which takes us back down to 4167 where buyers defend and press us back up to test Monday’s session high 4207.25.

You can see these levels on the following volume profile chart:

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Bulls are starting the new year off on the cusp of a gap zone in the Nasdaq, and as we approach US trade the globex market is pushing into it. Trade volumes have come back to life and showing overall health in the facility of trade overnight which bodes well for intraday opportunity.

This is the first Monday of the year and month and could feature some aggressive jockeying for position. It is wise to closely assess the price action and trade in the direction of the hardest punches. The economic calendar is quiet today with most trades setting their sights on Wednesday’s afternoons FOMC minutes and Friday’s monthly Non-farm payroll data.

The primary feature of the last few weeks of trade was a strong swing higher across most equity markets as we headed into and through the holiday season. Sparking the move was the FOMC rate decision and Yellen press conference on December17th. We went gap up away from this area and grinded higher before rolling back over before prior swing highs. The Nasdaq was the only of the 4 major indices unable to take out prior swing high.  See below:

Whenever a move is news driven our expectation is for a return to “the scene of the crime” by the market. It will be interesting to see if we do that today, or if instead the buyers step in ahead of this price gap.

The last 3 days of trade were weak and unidirectional down suggesting sellers are controlling the short term auction and the market is trying to find buyers strong enough to start an upward auction. The overnight session took out Friday’s lows and as we approach US cash open it is trading along the low end of its range. Sellers printed the largest rotation of the session between 7&9am as the US came online, a 13.50 point rotation to take out the prior globex lows.

My primary hypothesis is for buyers to make a push into the overnight inventory early on and target 4208.75. If they do not find sellers here (initiative in nature relative to Friday and responsive relative to globex), then look for a gap fill up to 4214.50 then a test of overnight high 4220.75 and possibly a move up to 4225.75. I will be looking for signs of responsive sellers at each of these levels who will seek to push us down through overnight low 4197 to target MCLVN 4179, range gap to 4173, and potentially a full gap fill down to 4160.25

Hypo 2 is a opening drive down which takes out overnight low 4197 and targets MCLVN 4179. If no strong buyer response here then continue to range gap 4173 then gap fill 4160.25 and a blow through to test the CHVN at 4144.75.

Hypo 3 is a variation of hypo 1 where buyers gain acceptance inside Friday’s range and then make a big secondary push up through Friday VAH 4225.75.

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Nasdaq futures are inching higher as we head into the new year of trading. Volume has normalized in globex leading me to suspect the quality of trade may resume during RTH as well.

There are some economic data releases to be aware of – at 9:45 the Markit Mfg PMI and then at 10am Construction Spending and ISM Manufacturing. These early releases may lend some choppiness to the early trading action.

The futures managed to hold the Wednesday lows overnight and push up through the poorly auctioned zone from 4262.50 – 4252 (pink box on chart). The buyers are defending the globex midpoint at 4248 as we approach the open.

Sellers took control of the short term auction this week after a balance day on Monday. Tuesday went gap down and when buyers responded and attempted to push us back into Monday’s range we saw a sharp rejection lower. When Monday showed afternoon follow through it suggested the intraday sellers had converted from responsive to initiative.

Wednesday they defended a gap and range extension up. Again they defended Monday’s value and then pressed us lower for the rest of the session resulting in a neutral-extreme print. Wednesday’s profile structure carries strong directional conviction with it, thus the sizeable gap up this morning is suspect.

The slightly longer, intermediate term timeframe resembles neutral-to-slight bullishness. We have essentially traded flat for the last three weeks.

Early on I will be watching for buyers to make a push through the thin zone for a test of globex high 4262.50. I will be looking for responsive sellers in the zone from 4262.50 – 4271.25. From there I suspect we could slide back down through the thin zone to test 4254.25.

Hypo 2 is sellers pushing into the overnight inventory early with a drive which is likely to target globex low and then work toward Wednesday low 4228.00. This opens up the auction to test the low volume node down at 4216.50 and puts the December 17^th gap into play.

Hypo 3 we see buyers sustaining above 4271.25 and pushing a secondary leg up to 4285.25 thus regaining control of the short-term auction.

I have highlighted these levels on the following volume profile chart:

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The Nasdaq is hardly showing a pulse as we heading into trade this morning having traded only a paltry 6000 contracts so far. Range is low, prices are a bit higher and the primary feature of the session is an 11 point rotation up which was faded back to the mean of the session.

At 8:30am Initial and Continuing Jobless claims came out mixed and we saw little-to-no reaction from the market. At 9:45am we have Chicago purchasing manager index set for releases, this may lead to a choppy open, and then at 10am we have Pending home sales.

At 10:30am we have crude oil and gas inventory data followed by a noon read on natural gas inventories. The weekly energy announcements have been showing an elevated impact on not only the price of the commodities but also equities, thus, they are something to keep in mind as you navigate your trading day even if you primarily deal in stocks.

Turning to the charts, we can see the intermediate term coming into balance. This is seen as a series of overlapping value areas which I coagulate into a volume micro-composite (red-outlined, green value area profile on left).

Yesterday we opened gap down and when we tested higher sellers rejected us away from Monday’s range aggressively and targeted the gap fill down to 4281.50. If you recall this was yesterday’s hypo 2.

Sellers could also be seen actively defending the micro VPOC at 4295 which resulted in the second leg down. I emphasize this not to pay myself on the back but instead to show you the market has memory and this is not a random walk of price.

Toward the end of the session we saw some signs of excess low and then a sharp candle higher.

Today my primary expectation is for sellers (initiative in nature relative to the int term, and responsive relative to the overnight session) to push into the overnight inventory and close the gap down to 4283.50. Here I will look for signs of buyers who work back up to test the MVPOC at 4295, just abover the overnight high of 4294.25.

Hypo 2 is sellers become initiative and push through overnight low 4281.50 and test the lower end of intermediate term balance via taking out yesterday’s session low 4273.75 then 4271.25. If buyers are not present at this level then a continued exploration lower to the LVN at 4263.

Hypo 3 is the buyers blast through overnight high and MCVPOC 4295 and work to close the Monday-Tuesday gap up at 4313.25.

I have highlighted these levels on the following volume profile chart:

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Nasdaq futures are trading lower overnight as volumes continue to come in light on the globex market. Around 8:30am some chatter out of Russia resulted in a bit of a reaction from equity and gold prices, pushing the Nasdaq below Monday’s range and spiking gold higher.

At 9am the Case-Shiller Composite -20 data is due out and at 10am Consumer Confidence. The 10am news might cause some early chop before the market finds direction on the day.

The intermediate term is showing signs of coming into balance but still has a neutral-to-bullish skew. The monthly high is only about 20 Nasdaq points away and the quiet consolidation just below these levels increases the likelihood of a test up to 4323.75.

Early on I am looking for a bit of weakness to test the mcVPOC at 4295 where we see responsive buyers who work to close the overnight gap to 4313.25 and take out the overnight high 4318.

Hypo two is buyers push into the overnight inventory but get rejected away from Monday’s value 4309.50 and begin exploring lower to target a move down to 4295 and if they do not find responsive buying here then a continued move to 4285.25 and finally a gap fill down to 4281.50.

Hypo 3 sellers drive off the open and close the open gap down to 4281.50 early and continue testing lower to 4277.50, 4271.25.

I have highlighted these levels on the following volume profile chart:

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