Nasdaq futures are lower as we head into a fresh week of trade. Sunday evening we came into globex well below Thursday’s closing price due to a reactionary sell to Non-Farm Payroll data during the holiday shortened session Friday. Since opening yesterday evening volumes have been abnormally light and trade behavior has been 2-way.
The nature of the price move lower (news driven, low volume, outside of regular trade) makes it suspect. However, it has thrown us out of balance and therefore is likely to induce the higher time frame participants into the market. This means an elevated risk:reward environment intra-day. It also means I have an expectation for us to return to the scene of the crime, prices much higher, around Thursday’s close 4307.50.
Heading into today, my primary expectation is for buyers to push into the overnight inventory and test up to 4286.75. Here I will look for signs of responsive selling and 2-way chop to ensue which holds value low 4272.50. If this sets up, look for a secondary leg higher to test the 4300 century mark.
Hypo 2 is sellers become initiative off the open and press to take out the overnight low 4262. Look for signs of responsive buying around 4255.75 and 2-way trade to ensure.
Hypo 3 is an aggressive buying response, drive-like open when recaptures 4300 early and makes a full gap fill move up to 4307.50.
Hypo 4 is a gap-and-go trend lower.
Levels are highlighted below:
hypo 3 played out quick, now we need to see if sellers still have conviction at these levels
It seems sellers just don’t have what it takes to seriously derail the market.
still fly.