Nasdaq futures had another busy overnight session where volumes continue to run at an above average clip. The main feature of the overnight session was a strong rotation of buying which began just before 5am and just above yesterday’s low of the session. Synchronizing loosely with the move was economic news from the Euro-Zone where there PPI numbers came in a bit softer than expected. At 7:45am the ECB announced it would keep its Bank Rate inline with expectations and as we approach cash trade Mario Draghi is speaking at a rate press conference which is stirring prices lower. We have factory orders at 10am and our premarket seller is again active.
Since this chart took out a significant reference zone yesterday, let’s revisit the weekly chart of the Nasdaq composite. Price is currently pushing below an area previously inhabited by sellers. Thus, the market was not yet able to convert this resistance into support. After rotating the gap zone and printing some long legged dojis we have decidedly pressed lower. Bear in mind however, there are two trading days left in this week which might significantly alter the appearance of our current candle. The long term trend is still up, however this small move could be the start of a neutral environment on the long term:
Intermediate term we have gone into seller control. This can be seen as a series of lower highs and lows. The question now is where this cycle will end and how the next leg will print. There was a very complete feel to yesterday’s trade where we saw a very motivated move, a pullback around the midpoint, a secondary thrust, and then a corrective set of waves. That daily move settled out a naked VPOC that was left behind at 3967.25. That’s good news, the market is still auctioning in a very methodical manner. An argument could be made that the turn is in, however the task of bulls is to prove their innocence because this timeframe is seller controlled. I have noted the key price levels below:
Finally, I have noted the short term levels I will be observing on the following market profile chart:
Primary hypothesis – buyers off the open press to 3979.50 HVN where find responsive sellers who target overnight low 3969.25 and then yesterday’s low 3965.50 and continue lower to 3958.50 where we find a strong responsive bid and balance out
Hypo 2 – stronger buying drive off the open, pushes through HVN 3979.50 and up to 3986.75 CLVN where we find responsive sellers who cannot take out overnight low 3969.25 and we leg higher through 3986.75 to target 3995 VPOC and then 4000.25 millennial mark
Hypo 3 – sellers continue driving lower, take out overnight low 3969.25 then yesterday low 3965.50 to target 3958.50 then 3947.25 with a stretch target of 3944.50 (not likely)
hypo 2 in play
scratch that, hypo 1 back in effect
Yeah, the bleed needs to stop quick or hypo 3 is likely.
no counter rotation yet, the bulls really are uninterested, perhaps this comment will change their mind
haha… patience is so important. I still remember the day back in August that we were down (not small) but the value were higher, and you were pounding on a v reversal.