NASDAQ futures are coming into Wednesday gap down after an overnight session featuring normal range and volume. Price drifted lower overnight but price held the lower-mid range of yesterday’s regular session. At 7am MBA Mortgage Apps reading was not as poor as last week (-3.5% vs -11.2% prior) and at 8:15am the ADP Employment Change data was better than expected (Change for Jul 179.0K vs 170.0K Est).
Also on the economic calendar today we have ISM Services/Non-Manufacturing at 10 am. As soon as today, however, the markets may start to pause ahead of NonFarm Payroll, which is scheduled for release Friday morning at 8:30am.
Yesterday we printed a normal variation down. After opening gap down, buyers pushed the NASDAQ back to flat where we found a responsive seller. Seller then drove price lower all morning before sustaining trade down at this week’s ATR(14) band low. Sellers made one additional attempt lower just after lunch which revealed a strong responsive bid. The market then rallied nearly 40 points up into the end of the day.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4714.50. From here buyers continue higher, up through overnight high 4717.25 triggering a rally up to 4735 before two way trade ensues.
Hypo 2 sellers defend right at the overnight gap fill, right at 4714.50 and turn the market lower, gunning for overnight low 4698. They achieve it, then we settle into a range from about 4720 – 4700.
Hypo 3 sellers are become initiative and aggressive. Markets gap-and-go lower, take out overnight low 4698 and test below yesterday’s low 4681.75 setting up a move to target the open gap at 4663.75 before two-way trade ensues.
Levels:
Volume profiles, gaps, and measured moves:
