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Setting Up The Nasdaq for Another Greek Week

Nasdaq futures are lower heading into Monday’s trade. The 3-day holiday weekend came to an end with news that Greece citizens voted against the proposed referendum. The news sent US equity futures sharply lower when they opened yesterday evening. Since then we have printed an abnormal range, nearly 60 points, on abnormal volume. We’ve spent most of the session squeezing higher.

At 10 am we have ISM Non-Manufacturing Composite stats and looking forward we have FOMC minutes scheduled for release 2pm Wednesday.

We closed out last week churning inside of Monday’s big trend down range. The market overall showed signs of balance which, in a way, suggests participants were accepting prices lower. We’re heading into today within that range, but with a questionable globex swing low.

The chart looks like a giant crime scene, with 4 gaps littered across it. We’ll be opening right near the 6/30 gap, so that one will vanish leacing only the three overhead gaps.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and work the gap fill higher. Look to take out overnight high 4402.75 then attempt a full gap fill up to 4428.25 but stall out around 4416.50. Sellers defend this area and two way trade ensues.

Hypo 2 buyers stall ahead of overnight high 4402.75 and we push down through 4381.75 setting up a liquidation down to test overnight low 4344.

Hypo 3 full gap fill up, trade through to 4428.25 early and continue to test 4434.50.



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Super Balance

Markets pushed higher early this morning, and as we head into cash open price is entrenched in balance. Range is abnormally elevated on the overnight session and volume is close to abnormal too. The main feature of the overnight session is a 25 point rotation higher that hit right around 4am.

The Greek drama continues and at 7am Eurogroup Finance Ministers were set to meet.  At 8:30am Initial/Continuing jobless claims data, as well as Personal Income/Spending data were out and the initial reaction to the news is some slight selling. Also on the docket today is Market Composit PMI at 9:45am and Nat Gas Storage data at 10:30am.

Yesterday we printed a neutral extreme day, and quite an interesting one. Price went up and took out the prior swing high and order flow dried up. We spent the rest of the session working lower and went out near the session low.

This action followed what has been a frustrating week for bears. We started Monday with a big gap up and sellers have struggled to fade it. Instead we are churning and accepting these higher prices.

The result is a well-defined value area that we can work with. It spans from 4545 – 4511. The more time we spend inside this balance, the more likely it is to resolve higher and in congruence with the higher time frame trend.

Heading into today, my primary expectation is for buyer to push on the open to target 4541. From there I will look for sellers to defend the high end of value and two-way trade to ensue.

Hypo 2 is sellers push into the overnight inventory and close the gap down to 4514.50, setting up a test of VAL 4511. Look for buyers and two-way trade to ensue.

Hypo 3 sellers close overnight gap early, selling pressure persists, and we push to test the century mark 4500. Look for a liquidation if we pierce the air pocket below 4498.50.

Hypo 4 strong buyers, push up through 4545 and continue on to test above yesterday HOD 4555.25 to target measured moves at 4557 and 4565.75.



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Three Possible Outcomes for Today’s Trade

Nasdaq futures are a touch lower as we round the bend into cash open. The session featured normal range and volume while trading inside of yesterday’s range. This suggests we are in balance and nothing overnight changed that. The overnight profile features a weak low and the predominant feature of the session was a 16 point rotation lower around 5:30am, otherwise the session yields little clues on the day.

At 8:30am a buffet of economic numbers was delivered—most coming in-line or slightly better than expectations. At 10:30am we have crude oil inventories and at 2pm it appears a Greek Summit meeting is taking place over in the Eurozone.

Yesterday we printed a normal variation down but saw little initiative selling after going range extension down. Instead we grinded back up into the balance formed by Monday’s neutral day. Starting the week with a big gap up, after starting the prior week with a big gap down, may make participants hesitant to chase price higher. However, the longer we can hold balance up here, building acceptance of these prices, the more likely it becomes that we test contract high and explore for buy stops.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and close the gap up to 4541.25. From there I will look for them to take out overnight high 4545.75 setting up a move to target 4557 then 4565.75. Stretch targets are 4579.50 and 4596.

Hypo 2 buyers struggle while closing the overnight gap and we push down to take out overnight low 4526. Look for price to continue lower and look for buyers around 4511.75 then continued balanced trade.

Hypo 3 sellers push down through 4511.75 to target the 4500 century mark. If they can push trade below 4498.50 look for liquidation to take hold, and a fast move down to 4465.25 with a potential gap fill target down at 4454.



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First We Cover A Few Scenarios

Nasdaq futures are lower as we head into option/contract expiration week. The session opened gap down, a somewhat uncommon occurrence, and then spent the rest of the session trading in a normal 20 point range on somewhat normal volume. Volume analysis is a bit buggy right now as some volume is still trading on the June contract while most has rolled onward to the September contract.

The economic calendar has a few events today—at 9:15am Industrial/Manufacturing Production, at 10am the NAHB Housing Market Index, and at 4pm the Net Long-term/Total TIC Flows. However, attention will quickly shift to Wednesday afternoons Fed Rate Decision which is likely to be a high impact event regardless of the decision/verbiage. We are also still dealing with headline risk out of the Eurozone.

Last week we came into Monday gap down and proceeded to sell off for most of day and into Tuesday morning. By Tuesday afternoon, prices were off the lows and Wednesday featured a trend day up. After a brief continuation higher Thursday, equities rolled over and grinded lower into Friday’s closing bell.

Heading into today, my primary expectation is for sellers to push lower and work below 4405 to test the 4400 century mark. Look for sellers to target the NVPOC at 4405.50 then some churn at 4398 before continuing lower to test below last Tuesday’s low 4390.25.

Hypo 2, buyers push into the overnight inventory, take out overnight high 4437.25 to set up a gap fill trade to 4448.25. Look for responsive sellers to defend Friday’s range.

Hypo 3 churn, 2-way trade south of the overnight gap (4448.25) followed by liquidation in the afternoon.

Hypo 4 early push lower to NVPOC 4405.50 and sharp responsive buy up to close the gap at 4448.25 and continue higher.



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