Huge Volume Persists

Nasdaq futures are hovering right around yesterday’s low as we head into Thursday’s trade.  Volume overnight is above yesterday’s and that is saying something.  We are running at extremely high volumes in the globex session (and RTH).  This market is doing a very good job of facilitating trade as it heads lower.

Tomorrow is option expiration day after what has been the fastest down week of the year.  As we wrap up the week there are a slew of economic releases including manufacturing numbers at 9:15 am, Philly Fed and Housing Market index at 10am, and Friday we have more housing stats premarket then U of M Confidence at 9:55am.  We also have the Ebola, taper, major earnings including Google, and a big down market.

Yesterday I put out a note about how this type of action is surly to attract the interest of a higher timeframe.  Depending on how we close, this news will reach many normal folks for the first time over the weekend.  It will then be their discretion to act.  We have no way of truly knowing how their perception will color the market, however we can continue to be vigilant as the increasingly risky hole shorts continue to win out in this marketplace.

We have been zoomed out and looking at the daily chart of the Nasdaq futures since the span of price action has accelerated.  As you can see, yesterday occurred on the heaviest volume we have seen this year.  The low printed on the session was of decent quality, meaning, we saw a sharp response from buyers which left an excess low.  This type of buying action can motivate others to begin legging back in and using this larger buyer to lean on for support.  Therefore, if we do not see similar buyer strength near these lows today, it might result in another leg of selling as the fresh buy flow loses traction.  Nevertheless, we can look for signs of follow through today as an opportunity at a tradable trough.  Note how we are coming into an area that was vehemently defended by sellers earlier in the year, this is very likely to behave as support:

A commenter once asked if I keep a running count of the naked VPOCs the market leaves behind during a swing.  I never have, but as we systematically ‘check back’ to these levels during this correction I could see the merit in such a counter.  Every day when I ‘look left’ and take the time to find the highest quality reference points I have another naked VPOC to note.  The market loves to retest these HVN price zones before continuing higher and our most recent leg up abandoned that idea and marched higher relentlessly.  Now that we are on the other side of the mountain these levels are being worked.  I have noted the next NVPOC at 3676 as well as a few other observations on the following intermediate term chart.  Do not let this chart confuse you, it is simply key price levels to observe in the seller controlled intermediate timeframe: