NASDAQ gap down in range after 3am algo spike, here is the Tuesday trading plan

NASDAQ futures are coming into Tuesday gap down after an overnight session featuring extreme range and volume.  Price was balanced for most of globex until about 3am when a recycled ‘trade wars’ news piece caused prices to spike higher.  The spike looks algo driven, and it cleared out several levels of resistance in its wake.  Price subsequently erased the gains and as we approach cash open prices are hovering below Monday’s midpoint.

On the economic calendar today we have case-shiller home price index at 9am, consumer confidence at 10am, a 4- and 8-week T-bill auction at 11:30am, a 5-year note auction at 1pm, and Fed speak from three Fed bankers at 2:30pm.

Yesterday we printed a neutral extreme up.  The day began with a gap up and beyond the Friday half-day range.  Buyers drove higher on the open, stalling just before closing the gap left behind last Monday-to-Tuesday.  Responsive sellers pushed the market range extension down but initiative buyers (initiative relative to Friday’s close, responsive relative to Monday’s open) rejected a move back into Friday range.  We then rallied into the close, traversing the entire day’s range, closing the last Monday-to-Tuesday gap, and closing near session high.

Neutral extreme.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6670.  From here we continue higher, back up to the algo spike ‘scene of the crime’ taking out overnight high 6712.50.  This triggers a rally up to 6800 before two way trade ensues.

Hypo 2 buyers stall out after closing overnight gap 6670 and two way trade ensues.

Hypo 3 sellers press down through overnight low 6622.25 and continue lower, down to 6591.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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