Nasdaq futures were set adrift higher overnight after closing out the session at a new swing high. Volume and range are a bit light but still well within the confines of normal. The behavior has a 1-timeframe feel to it, never managing to put in a counter rotation of significant magnitude during the session.

We have U of M Confidence numbers at 10am. It is the preliminary read for February. Last month this data had an elevated impact on price. Fed Fisher is speaking at 1:30pm.

Yesterday the market had a “pro gap” up and didn’t give much of it back before working higher for most of the session. The resulting profile has an air pocket from 4335 – 4329 in what looks like a double distribution trend day.

Intermediate term we are bullish with a slight neutral skew given we are just above swing high. When the market takes out a major level I like to take my eyes out to a weekly chart of the composite to see what has happened. See below:

My primary expectation heading into today is for sellers to push into the overnight inventory and work at a gap fill down to 4345.75. Sellers can penetrate yesterday’s range and work through the volume pocket 4335 – 4329 to ultimately target the naked VPOC at 4326.75.

Hypo 2 is sellers cannot press into yesterday’s range and we take out overnight high 4362 and continue exploring higher prices.

Hypo 3 is a gap and go drive higher.

Hypo 4 is stronger than expected selling which takes out the air pocket 4335 – 4329 early and works toward testing yesterday’s low4315 putting yesterday morning’s gap into play for a sharp reversal back into the multi-month range.

Key levels are highlighted below:

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As we draw near the close of the week, the Nasdaq performance is well out in front of the other indices, 3x as much performance as the Russell and 50% more performance than the S&P. The strength this week in shares of AAPL [4.31% this week] likely attributed to this behavior, but with bearish Friday on the horizon one has to wonder if the Nasdaq is bluffing or truly taking the reigns of this bull. One would be wise to keep a watchful eye on Apple.

Futures are higher as we head into cash open. There was a flurry of buying yesterday just after cash close as participants received more news about the Greek situation. The action came to an end just before 5pm after it tagged the Christmas Eve (12/26) HOD 4322 to the tick. We then reversed lower and cut into yesterday’s range a bit, down just below the MID 4288.75 before reversing and trading all the way back up through the 4322 high.  Despite the seemly big overnight action, the range managed to stay 1^st sigma, although range is elevated to slightly abnormal 2^nd sigma levels.

Price was at this level when Advance Retail Sales came out well below consensus. The bad news received a positive reaction. Bad news-positive reaction is a v.bullish behavior.

We are trading on the upper end of a range dating back to late October. The market behavior leading up to today would lead one to expect range high to be defended, sending us back lower. However, the range is mature, thus it is possible we shift into a discovery phase up.

The market profile structures leading into today are anything but normal. We have printed FOUR neutral days in a row, and several more in the last few days. This speaks volumes to the compression taking place and the battles it’s creating.

Early on I will look for sellers to press into this overnight inventory and work back to around 4305. There I will look for responsive buyers to take us back to to target the overnight high 4325.50 and close the gap up at 4333.

Hypo 2 is buyers are more aggressive on the open and drive higher at the start, take out 4333 early and look to make new swing high.

Hypo 3 is sellers push down into yesterday range and close the overnight gap to below 4298.25, and continue lower to target the overnight low 4285.75.

These levels are highlighted below:

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Nasdaq futures are trading flat as we come into the cash session. Range compressed down to an abnormal sub-1^st sigma range on low, but normal volume. We traded in the upper quad of yesterday’s range.

A few of the bigger players who reported earnings this morning are trading higher (PEP, TWX, ING) and the economic calendar does not have any major events for today. Fed Fisher is speaking in New York to economists, he has been doing so since 8am. We have oil/gas inventory stats at 10:30am and at 2pm we have the Monthly Budget Statement.

Yesterday we opened gap up from Monday’s neutral day. Buyers defended re-entry into Monday’s range and then the market began one-time frame trading higher for the rest of the session. The print was technically a neutral extreme due to the double range extension but the formations of value areas along the way and subsequent breaks higher looked more like a trend day.

Price exceeded Last Friday’s high and pushed into the large value distribution at the top of our intermediate term range. At this point we are on the high end of range and traders will be on watch for signs of an aggressive seller entrant. Over these next several days, buyers are tasked with proving their initiative, otherwise one is more wise to assume the current market behavior of bracket-range will continue.

My primary expectation heading into today is for choppy, 2-way action with a buying skew. Price will look to target the MCHVN at 4285.25 and continue higher to target 4293. Stretch targets are 4300 and 4302.50.

Hypo 2 is sellers us down the zipper to 4262.50 where we find responsive buyers who manage to take out yesterday’s HOD 4284 but not much more and begin the process of cutting into yesterday’s gains targeting 4254.25 then 4240.50 with a stretch target of 4233.25.

Hypo 3 is strong buyers off the open who press up through 4290 early and then put together a second leg up to test 4302.50.

These levels can be seen below:

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Nasdaq futures traded a balanced session overnight before running higher at 7am on news of an extension to the Greek bailout. It is important to note when a move was news driven as the market tends to ‘check back’ to the originating point of the move to ensure it still garners the same type of reaction.

Volume and range are normal on the session and the economic calendar is quiet today. Fed’s Lacker has been talking since 8:20am and we have Wholesale Inventories at 10am. This may result in a choppy, 2-way open as we wait for the news shortly after the bell.

The intermediate term is neutral dating back to late October. We had a strong up move last week, and yesterday we printed a neutral day after starting the week gap down. Responsive buyers were found inside of last Wednesday’s range.

Heading into the open with a ‘pro gap’ up, my early expectation is for an open auction outside range open type which attempts to reenter Monday’s range at 4232 and more importantly the crime scene at 4225.  Hypo 1 is buyers step in ahead of Monday’s range and press higher to target Friday’s NVPOC at 4249.50 then work toward retesting Friday’s high 4268.25

Hypo 2, we penetrate the range then I will be expecting a tag of the VPOC at 4219.25 then a full gap fill to 4215.50.

Hypo 3 is a drive down gap fill to 4215.50 and continue lower through Monday’s low 4201.75 and push to test the MCLVN at 4198.50 and a stretch target of 4189.

These levels are highlighted below:

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Nasdaq futures are lower as we head into US cash open on a normal amount of volume. Range is also normal but entirely to the downside. The overnight session has a slight trendiness to it. The session opened right where we closed Friday and quickly moved lower. The action took us back to Wednesday’s open gap at 4204.25.

The economic calendar is quiet to start the week. We have a report on Labor Market Conditions out at 10am which is likely a low impact announcement. We also have Fed’s Powell speaking in Washington right at 4pm regarding the audit proposal. Lowes and Masco are both trading higher in the pre-market after reporting earnings. It will be interesting to see how this affects the weak charts on KBH and BZH.

Last week we traded just below our prior swing lower before a sharp buyer stepped in and reversed the auction. We spent the rest of the week exploring higher—eventually reaching upward to the top-end of our intermediate term range. There we found responsive sellers during Friday’s session when price went range extension up, flagged and then fell through the range resulting in a neutral day.

My primary expectation this morning is for buyers to push into the overnight inventory and work up to 4214.50. This is a short term pivot that will give clarity to the morning. If sellers cannot defend in this area then we head higher for a full gap fill to 4230.50 then target the MCHVN at 4233.25 and continue to a stretch target of 4245.75. However, if sellers do defend at 4214.50 then we continue working lower to test Wednesday’s low 4191.25 and target the mCVPOC at 4178.75. Here I would expect to see signs of responsive buying.

Hypo 2 is we drive lower off the gap down and tag 4178.75 early, find responsive buyers who cannot reclaim Wednesday’s range low around 4191.25 and we see anther leg lower down to test Tuesday’s low 4166.50.

Hypo 3 is a robust push higher which fills the overnight gap to 4230.50 early and overshoots it, then another big leg higher up to 4248.75.

These levels are highlighted on the following charts:

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Volume and range expanded to 2^nd sigma overnight suggesting the session was slightly abnormal. It started off with a secondary completion wave after the market experienced an encompassing wave of selling at the end of the trading session. The secondary wave pushed through overnight and exceeded yesterday’s low and pushed deep into Tuesday’s range—trading down through the volume pocket we printed on that day before finding strong responsive buying.

Once the auction reversed higher it continued doing so, nearly uninterrupted, up to now, where we are trading about 20 points higher from yesterday’s close. At 5am Fed’s Rosengren was giving an early bird lecture on Sovereign Risk (apropos), at 7am the Bank of England rate decision and Asset Purchase Target numbers came out inline (brought buyers into the NQ), at 8:30am we had Initial/Continuing Jobless Claims and Trade Balance. At 10:30am we have Natural Gas Storage change stats for January.

Prices are higher over a 2-3 day stretch after oversold conditions. We are trading on the high end of a 7-day value range. We are also trading just below the gap zone from 01/26 (last Monday) but we have not yet closed the range gap. Yesterday was a neutral day with a double volume distribution. Intermediate term we are neutral-to-slight-bullish.

My primary expectation this morning is for sellers to push into the overnight inventory and try to fill this gap down to 4204.25. The volume pocket from 4220 to 4209.50 will be an interesting reference point for gauging their success. If they can push down to 4214.75 my expectation is elevated that they will trek all the way through to 4209.50 and a gap fill to 4209.25 where we find responsive buyers.

Hypo 2 is a balanced 2-way open with buyers defending the volume pocket ~4220 setting up for a test of the crime scene at 4242. If they do not find responsive selling then take out yesterday’s high 4243 and work up to the range gap 4246 then a stretch target of full gap fill 4269.25.

Hypo 3 is we grind slowly into yesterday’s volume pocket (4220 – 4209.50) and spend much of the session “filling it in” with 2-way chop.

These levels are highlighted below:

And here are the current market profiles:

 

 

 

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Nasdaq is trading lower premarket on a balanced structure and normal range and volume. ADP Employment change came in a bit lower than expected at 8:15am and prices saw little reaction to the news.

On deck we have ISM Non-Manufacturing at 10am, Crude-distillate inventories at 10:30am, and Fed’s Mester is talking at 12:45pm.

Yesterday the market went gap up after a strong bounce of the lows Monday only to see some early selling. Sellers pushed to test the afternoon rally and found responsive buyers who took us all the way though the initial balance to put a neutral. Buyers then sustained their strength into the close resulting in a neutral extreme print. This day-type is a high conviction day type for buyers.

Intermediate term, we are trading at the top end of a six-day range after a big gap down last week. This balance structure is inside an even larger balance structure dating back to late October. Compression-inside-compression.

Heading into today, my primary expectation is for sellers to try and push lower early on and test the LVN at 4189. Here I will look for responsive buyers who work toward closing the overnight gap up to 4215.25. Stretch target is a move up into the above gap and a targeting of the MCHVN at 4233.25.

Hypo 2 is sellers push through the LVN at 4189 and test through the pocket and down to the 6-day mCVPOC at 4178.75. If buyers are not found here then a continued move lower to test yesterday’s low 4166 and a revision to the October MCVPOC down at 4144.50.

Hypo 3 is buyers press up and close the gap to 4215.25 and push above 4233.25 to sustain a drive up to close the gap to 4269.25.

These levels are highlighted on the following volume profile chart:

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Nasdaq futures are up a few points as we head into cash open. The overnight session featured 1^st sigma range and volume (normal) trading in a balanced manner. Price extended above yesterday’s range and formed a weak, double top at 4203.25 which was also the swing high on 1/30.

Yesterday we had strong early selling which slightly exceeded our 1/29 low 4095.75 before finding a strong responsive buyer. The responsive buyers stepped in before 10:30am thus preserving the initial balance. Buyers then transitioned to being initiative in behavior in the afternoon and made a strong secondary push to close out the session.

Overall, the last 5 days of trade are overlapping but the last three in particular form an interesting view of balance. Given the week overnight high and the quality low below, my initial expectation is for price to work higher and take out the overnight high 4203.25 and continue higher to test the MCLVN 4209.50. The upper target for this move is the MCHVN at 4233.25.

Hypo 2 is a gap fill down to 4183.75 then a move up toward overnight high 4203.25.

Hypo 3 is sellers push into the overnight inventory to close the gap to 4183.75 and push through to take out the overnight low 4165.75 setting up for a move back to the MCVPOC at 4144.50.

Hypo 4 is a drive higher, take out 4233.25 early and work up toward the open gap to 4246 then 4269.25.

These levels are highlighted below:

Keep these economic events on your radar too:

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Nasdaq futures are up a bit as we head into the cash open. The overnight session was on the low end of normal range and volume in a balanced session of trade. 8:30am we head Personal Income/Spending stats, we have 9:45am Markit Manufacturing PMI, and 10am Construction spending and ISM Manufacturing. XOM is trading flat after reporting earnings trhis morning.

Friday the Nasdaq gave back about half of the rally it had Thursday from oversold conditions to settle right at the MCVPOC of our large intermediate term balance dating back to the end of October. The market is trying to explore lower prices on the short term and is did an okay job of it last week with a gap lower and so far a lower high.

Early on, my primary expectation is for sellers to come in and work the overnight inventory toward a gap fill down to 4144.75. After some two way action we continue lower to target the overnight low 4129.25 and then the NVPOC at 4121.25.

Hypo 2 is buyers push off the open and work higher to 4173.50 and then stretch to 4181.25 where we find responsive selling back toward the gap fill 4144.75.

Hypo 3 is a early drive higher above 4181.25 and continue higher to test Friday’s high 4203.25.

There levels are highlighted on the following volume profile and market profile charts:

 

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Nasdaq futures are lower as we head into cash open on an abnormal 50 point range and normal volume. At 8:30am the GDP data released was below expectations and we saw a brief pop in futures which was ultimately faded. As we come into the opening bell prices are on the low of the globex session.

Yesterday buyers were put on their heels early in the session as price pushed down into the lower edge of a multi week range and managed to turn. Price then took back more than half of the selling on Wednesday to finish the day up near the highs. Overall the week has been seller dominated since the big gap down on Tuesday.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and work up to 4171.50. Here I will be looking for signs of responsive sellers (responsive relative to the opening print, initiative in nature verse yesterday’s close). They will look to target the MCVPOC at 4144.50 where we will churn through lunch.

Hypo 2 is sellers drive off the open push down through MCVPOC 4144.50 down to 4125.75 where we find responsive buyers back up to MCVPOC 4144.50 and churn through lunch.

Hypo 3 is stronger buyers push on the open, take out 4171.50 and target a full gap fill up to 4185.75. If they can sustain price above 4171.50 then look to target overnight high 4208 and stretch target of MCHVN 4233.25.

Hypo 4 is a drive down, take out 4125.75 and target a break of Thursday’s low 4095.75.

Levels:

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