NASDAQ futures are coming into Wednesday gap up after an overnight session featuring normal range and volume. Price worked higher all night long, working beyond the Tuesday high by 8pm and continually drifting higher throughout the Globex session. At 7am MBA Mortgage Applications data came out better than last week.
Also on the economic docket today we have House Price Index at 9am, crude oil inventory at 10:30am, a 2-year floating rate note auction at 11:30am, and a 5-year note auction at 1pm.
Yesterday we printed a double distribution trend day. The day began with a gap up and early rally attempt that was rejected by responsive sellers (a common feature going back the prior 5 trading days). Then, after filling the overnight gap to the tick [5063.25] price began to rise. The rally accelerated through lunch—pressing to new all-time highs and continuing to rally for the rest of the day.
Heading into today my primary expectation is for sellers to work into the overnight inventory and work a half-gap down to 5109 before buyers step in and work up through overnight high 5124.75. No stretch targets available, open air.
Hypo 2 test down to Tuesday high 5104, buyers reject a move back into the range and we continue working higher.
Hypo 3 sellers recapture Tuesday high 5104 then press a gap fill down to 5096. They press down through overnight low 5095.75. Look for buyers down at 5092.25 and two way trade to ensue.
Hypo 4 strong sellers sustain trade below 5092.25 triggering a liquidation down to 5069.50.
Levels:
Volume profiles, gaps, and measured moves:
