The market has been one-directional overnight, with a steady bid elevating prices. Immediately turning our attention to the NASDAQ, the weakest market of late, we are trading inside of yesterday’s range but outside of value meaning the environment is risk elevated but not as elevated as yesterday.
Bear in mind however, that we have an NFP announcement premarket, which may materially impact price and where we trade when the opening bell rings.
I have framed our current price action in the context of everyone’s favorite sentiment chart, and I have taken to the vision that we are trading inside of aversion, the uncertain state occurring prior to a new thrust higher. If I am right, then we should not see much of these overnight gains given back early on. Instead we should see price press up to 3577 and churn about before ultimately pressing higher.
However, I do not want to be caught flat footed so I will run though the layers of control in the marketplace:
Long term price action is firmly controlled by buyers (BTD)
Intermediate term, we are seeing balanced, 2-timeframe control with extremes being faded and a slight bullish imbalance
Yesterday, sellers dictated direction of the tape but ultimately printed a “b” shaped profile after showing no follow-through in the afternoon
Overnight, buyers are in control
When the market opens at 9:30, watch the opening swing closely. If we see a one directional drive higher the long timeframe is asserting itself. If we see two way action, we are still in the intermediate term and we need to be keen on the intermediate term’s balance structure.
I have highlighted the key zones of the intermediate term balance on the following volume profile chart:
