Overnight Strength

Last week’s momentum carried over into last night’s globex session where we saw the indices continuing to rise.  The push higher occurred mostly during the first hour of trade Sunday evening, after which we balanced out and accepted the prices.

I find myself stating this bit of context often although it is by no means an effective timing tool but, index markets rarely print swing high outside of regular trading hours.  Thus we can assume the overnight high is vulnerable.

The question this morning is whether the sellers will make an attempt to fill the overnight gap or if we will instead “gap-and-go” which is a distinct possibility given the holiday week context.  Turning our attention to the NASDAQ composite, sellers need to first push through the overnight value area low zone from 3430.50 – 3429.50.  If sellers can breach this zone and press down to 3428.50 we are well on our way to filling the gap.

Should the sellers succeed, downside targets are 3422.50 (Friday high), 3420.75 (VPOC), and ultimately the low volume node at 3418.  This level is of particular interest because it represents the price moment when sentiment suddenly shifted optimistic Friday.  Sustaining trade below 3418 may suggest a shift in sentiment.

To the upside, we are working with measured moves.  I show a buyer target zone from 3437.50 – 3436.75.

I have highlighted the above levels on the following 24-hour Market Profile chart: