NASDAQ futures are coming into the week with about a 50 point gap down after an overnight session featuring extreme range and volume. Price worked lower overnight, uni-directionally, trading down through the Friday cash low and briefly poking a few ticks below the Thursday cash low before discovering a responsive bid. As we approach cash open, price is hovering in the lower quadrant of last Thursday’s range and the auction is in balance.
On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am.
Last week we saw strength across the board Monday and Tuesday, followed by a marking of time through the rest of the week—with most of the major indices flagging sideways into the weekend. Meanwhile the Russell diverged and continued higher. This suggests risk appetite was increasing. The last week performance of each major index is shown below:
On Friday, the NASDAQ printed a normal variation up. The day began with a gap down and tight two-way auction. The chop eventually gave way to a slight range extension up, however sellers kept us from filling the overnight gap. We ended the week near Friday’s high but still inside the Thursday range and still with the overnight gap unfilled.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6594.25. From here we continue higher, up through overnight high 6616.50 setting up a move to close the Thursday gap at 6624.25 before two way trade ensues.
Hypo 2 buyers stall out around 6581.75 and we begin working lower, down through overnight low 6525.25. Look for buyers down at 6519.50 and two way trade to ensue.
Hypo 3 sellers gap-and-go lower, sustaining trade below 6519.50 to set up a move to target 6500. Stretch target is 6460.
Levels:
Volume profiles, gaps, and measured moves:
