Right Back Where We Were Stimulated

Overnight volumes are elevated to the 2^nd sigma on the Nasdaq while the range has been contained and normal. Prices are higher on the globex session however the gap up has been a questionable show of strength for several sessions.

This week the price fluctuations of the Nasdaq have been highly correlated with oil. Oil volatility has become a key driver to investor sentiment and price action and likely will continue to do so until we see it come into balance.

Today is FOMC day. Earlier this morning we heard from the Bank of England and their commentary produced a modest bounce. During today’s trade, my expectation is for an hour or two of action followed by chop as the market waits to hear from The Fed.

Prices are currently trading in the range of October 30^th which, if you recall, was the session before Japan announced their massive stimulus package which led to a big gap up and a subsequent grind higher for several weeks. Now we have returned to the ‘scene of the crime’ to see if buyers are still motivated at these levels.

We slid through the second pocket yesterday and now we are coming into some solid structure. Given the velocity we have in our approach to this region, we may overshoot the CHVN at 4053.75. I have noted on my chart a few price levels just below that CHVN which are about 50 Nasdaq points away from current prices.

Early on my primary expectation is for sellers to push into the overnight inventory and work a gap fill down to 4084.50. This puts us near the lows to target 4081.50 (ONL ) then 4080.75 (YLow).

Secondary hypo is a sharp move back up the volume gap which takes out overnight high 4116.75 and builds acceptance in yesterday’s value region up near 4130. This puts us into a holding pattern until Fed.

Hypo 3 is a drive down, which is still in the cards given the current speed of the market.