NASDAQ futures are coming into Wednesday flat after an overnight session featuring extreme range and volume. Price was chopping along the unchanged line for much of the overnight session before selling off around 3:30am New York. Price worked down below the Tuesday range, probing deep down into the 09/04 range before discovering a bid. Buyers spiked price back up to unchanged and as we approach cash open price is holding the line.
On the economic calendar today we have new home sales at 10am, crude oil inventories at 10:30am and both 2- and 5-year note auctions at 1pm.
Yesterday we printed a double distribution trend down. The day began with a gap up beyond the Monday range. After a brief open auction higher, price reversed and rotated back into the Monday range. Sellers worked the overnight gap fill then continued lower, accelerating price to the downside as the took out the Monday low. Sellers drove down and closed the open gap from 09/04 at 7722.50 before price settled into a choppy balance way down in the lower quadrant of the session.
Heading into today my primary expectation is for sellers to press down through Tuesday’s low 7701.75 and continue lower, down through overnight low 7683.25. Look for buyers down at 7674.25 and two way trade to ensue.
Hypo 2 sellers cannot take out Tuesday low 7701.75, instead reversing higher and trading up through overnight high 7759.25. Look for sellers up at 7800 and two way trade to ensue.
Hypo 3 stronger buyers rally price up to 7842, effectively erasing most of Tuesday’s selling before two way trade ensues.
Hypo 4 full on liquidation. Price accelerates down through 7674.25 setting up a run to 7629.50. Stretch targets are the open gap at 7616.75 then 7600 then 7572.25.
Volume profiles, gaps, and measured moves: