Nasdaq futures are up over 25 points ahead of cash open on a session which featured two major up rotations, one near 3:30am when Europe opened and another around 7am when early earnings announcements started coming out. Some of the buy flow is being attributed to better than expected earnings from CAT, who also saw a sizeable stock buyback occur. 8:30am we had Initial and Continuing Claims stats which came out in line with expectation. We have house price index at 9am, leading indicators at 10am, and then Natural Gas Inventories at 10:30am.
The Nasdaq is gapping just above the prior day range, and the size of the gap is what some consider ‘pro’ meaning an attempt to fade it is likely a trade only accomplished with very deep, professional pockets. The risk to such a trade is the volume pocket just above which could act as an accelerator if prices are not rejected away from the vacuum. The open will be vital to today’s trade. Do responsive sellers show up and dominate? Or do we see a dominant buy flow which sweeps us up into this pocket? See below:
The one trait sellers did not present yesterday which had been rather obvious during other down days was the strong volume and big negative cumulative delta. Instead we compressed yesterday. I have been keen on this prior balance zone formed to start October. When it formed to start the month I thought we would leave it to the upside. Instead we explored lower, found a sharp responsive buyer, and now here we are revisiting this zone. The MCVPOC held as resistance yesterday but we might explore through the region today to the other side (above). We also have the ‘LVN Separator’ at 3937.25 below as a key pivot should sellers price reject out of this area. These very important levels, as well as other vital price levels are noted below on the following volume profile mash up chart:
looks like German Eurozone PMI put that initial 3am bid in the market
primary hypo – buyers take back the balance zone by working to 3988.25 then if they can break it then test higher to 3994-3995
hypo 2 – overnight inventory proves excessive in demand, price breaks down into yesterday’s range, target VPOC 3956 then test of yest lows 3939.5
Natty up a little bit, gnrc pulling in for the day..suspect it’s just a pop, might be good of time as any to add
I put enough size on to sit through earnings, then I will re assess
Pro gap – thanks for explaining the term – something new to look for
rule of thumb is 10+ ES points and/or 25+ /NQ points