NASDAQ futures are coming into Wednesday gap down after an overnight session featuring extreme volume and range. The volume these past few weeks in Globex has been at a sustained extreme level unlike any volume we have seen in the last few years. Price was balanced for most of the night, chopping along the bottom-side of Tuesday’s midpoint before selling off. As we approach cash open, price is hovering just above Tuesday’s low.
On the economic calendar today we have crude oil inventories at 10:30am followed by a 5-year note auction at 1pm.
Yesterday we printed a normal variation down. It nearly resembled a double distribution down, and that is okay. We use these labels to gain a sense of the action but markets will not always fit cleanly into the definitions. It was between the two, and slightly bearish. Price began the day gap up, up beyond Monday’s high and into the single prints left behind last Friday when news hit Twitter that tariff talks had broken down between U.S. and China. The morning auction made an attempt higher but was met with responsive selling, and the morning two way auction eventually gave way to selling. Sellers worked an overnight gap fill and continued rotating price lower through lunch before discovering a responsive bid around 1:15pm New York. Buyers stepped in near Monday’s mid-point and worked price back up to the daily mid. We ended the session chopping along the bottom-side of the mid with sellers rejecting moves above it.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7563.75. From here we continue higher, up through overnight high 7600.50 before two way trade ensues.
Hypo 2 stronger buyers sustain trade above 7600 setting up a secondary move up to 7670 before two way trade ensues.
Hypo 3 sellers press down and out of the Tuesday low 7537 and take out overnight low 7521.75. Look for a buyers down at 7500 and two way trade to ensue.
Volume profiles, gaps, and measured moves:
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