Several weak economic data points, weak reaction to earnings in MSFT and CAT and PG, and overall sentiment have the Nasdaq down over 50 points as we approach cash trade. This is pro gap territory. Interestingly, though the range is 2nd sigma aka abnormal, it took place on a normal amount, or 1st sigma volume. Typically these big down sessions carry some heavy volume.
At 8:30am Durable goods Orders came in much lower than expected. At 9am we have the Case-Shiller Composite, at 9:45am Markit Composite/Service PMI, and at 10am Consumer Confidence, Richmond Fed, and New Home Sales. After the bell we will hear earnings from Apple.
The NYSE is invoking Rule 48 on the market open, which may make for a choppy open.
Value started to overlap between Friday and Monday but heading into the close it seemed the market was not doing a very good job rolling over. Sellers did manage to take out Friday’s low and we had some excess wick on the upper end of the candles, but value was holding. However the overnight session has pushed us down below the Sunday-Monday Globex session low and back to where prices were the morning we heard from the ECB. It will be interesting to see if the buyers defend this level so soon after capturing it.
Early on I am looking for buyers to work into the overnight inventory and push up to the naked VPOC at 4226.50. In this level I expect to see sellers stepping in and defending and then pushing back lower to take out the overnight low 4202 and test deeper into the morning of the ECB, targeting 4171.50.
Hypo 2 is gap and go drive down. Sellers drive off the open and push through Thursday’s range to test the low at4164.50.
Hypo 3 is choppy, 2-way trade through much of the session as the market pauses ahead of AAPL earnings and tomorrow afternoon’s FOMC meeting.
hypo 2 – just tagged MCVPOC 4144.50, sellers still pushing