One of the subtle cues the market gave us yesterday during the selloff was the divergence between the NASDAQ and the S&P. As prices in the S&P made lower lows verses Friday trade, the NASDAQ diverged. This is a risk divergence and was the first catalyst to take out your shopping list and build some risk.
Sellers were able to sustain control in the S&P on the net session by extending the initial balance lower, taking out prior day lows, printing a lower high/lower low, and pushing value slightly lower.
The NASDAQ was not as clear in regard to control. Sellers extended the initial balance lower but never took out Friday lows. We printed a higher high /higher low and value moved to its highest level this year.
Turning our attention to the NASDAQ, overnight prices went to new swing highs at 3621 before finding sellers. Since then price has bounced around a bit in a relatively balanced manner with a bit of a buying wick up top. This gives us two bits of sentiment. First, swing highs are rarely made outside of regular market hours, thus the overnight high is vulnerable. Second, the overnight inventory is net long, thus we may see some sell flow early on.
We are trading slightly above yesterday’s close which presents a potential gap fill trade back to 3609.50.
Overnight control, buyers
Yesterday control, buyers
Intermediate term control, buyers
Long timeframe control, buyers
I have highlighted a few upside targets, as well as levels of support I will be watching on the following volume profile chart:
