One Way or Another We Fill All Open Gaps

Nasdaq futures are gap up heading into Tuesday after a globex session featuring elevated range on normal volume. Price managed to push up into last Friday’s range slightly and consolidate in the low-end of last week’s range.

Coming up on the economic docket we have Case-Shiller Composite 20 at 9am, Markit Composite PMI at 9:45am, and Consumer Confidence at 10am. Investors are also likely looking forward to tomorrow’s FOMC rate decision tomorrow afternoon.

Yesterday we started the week gap down and soon after the open we found responsive buyers. Price managed to “check back” to the scene of last week’s breakout before finding the buyers who pushed but struggled to reclaim last Friday’s range. We spent the rest of the session slow grinding lower to ultimately go neutral.

Heading into today, my primary expectation is for sellers to push into the overnight inventory to close the gap down to 4523. From there I will look for sellers to continue lower to take out the overnight low 4515 and target the 4500 century mark. Look for buyers to defend here.

Hypo 2 sellers struggle to close the overnight gap and we push up above the overnight high 4549.25 . Look for some churn around 4553 before continuing higher to close last Friday’s gap up at 4563.75.

Hypo 3 is sellers push down through 4500 to close the open gap from 7/13 down at 4487.50.

Levels:

You do realize this entire week is contingent upon a positive reaction to Wednesday’s FOMC rate decision right?  It’s that simple, we’re already in wait-and-see mode, perfect conditions for option decay and surprise sex aka hot tub hand grenades.

Like one of my last old pieces of baggage, TRUE, a legacy position I was managing on my way out of the stock picking game.  It was like, “blood in, blood out bitch.”  CHOP, 47% loser.  I had every intention of closing this stock before their scheduled earnings because KORS and SWI weren’t too good to me.

It doesn’t matter.  What matters is time—the most finite resource of all and these big hits steal weeks from me, weeks that I have to toil and scrape back what’s rightfully mine.

Do you have a stock you’d like to see down 15-30%?  Let me know and I’ll go out and buy some shares.  Done.

In other news I bought some QLD this morning.  I left room to buy more and look forward to a nice dose of heat.  Truth be told, my fate is entirely in the hands of headline algos.  Good times.

The primary hypo from this morning’s report played out so far.  Sellers defended Friday’s range on our first attempt back into it.  Already looking like wait-and-see local-to-local type trading but these open auction outside range days can be big:

We’re kicking off the week pro gap down after the Nasdaq spent most of the globex session trending lower. Range and volume running hot and as we head into cash open price are hovering inside the 7/16 range.

At 8:30am Durable Goods Orders data came out better-than-expected and the reaction so far has been muted. Overall we have stabilized slightly over the last hour. Coming up today we have Dallas Fed Manufacturing Activity but an otherwise empty economic docket. Keep in mind however Wednesday’s FOMC rate decision which is likely to be a high impact event. We are still pushing through earnings season too, but no major Nasdaq components are set to report today.

Last week we started strong only to end weak after Apple earnings disappointed investors Tuesday afternoon. Afterwards we went gap down Wednesday and churned around before ultimately trending lower Friday.

The overnight action pushed us down to close a 2^nd of the 5 gaps left behind during our most recent rally. The Nasdaq has been methodical about closing open gaps. With three remaining to the downside and now 2 open gaps to the upside, it’s hard to have strong directional conviction.

Heading into today my primary expectation is for sellers to push right off the opening bell to target 4512.25. From there I’ll look for responsive buyers who work into the overnight inventory. Look for a half gap fill up to around 4543 then 2-way trade to ensue.

Hypo 2 gap and go lower. Push down through 4510 to target the 4500 century mark.

Hypo 3 open rejection reversal where buyers immediately step in and push aggressively higher, up through 4543 to set up a full gap fill up to 4563.75.

Levels:

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This is exactly the type of action that occurs right around the time people start swinging for home runs. It sickens me to think about how many times I’ve succumb to greed at swing high.

No more lads, you can keep your exploding can of beans—I hope you fare well. Seriously.

As for me, I’m done. There is nothing redeeming about this tape. Either you were in SNDK last night or you’re losing money, simple equation.

You know what is not losing money? The reasonably priced growth portfolio—15 stocks sent from Mars with direct orders to kill shorts.

Anyhow, 4584 was the downside target. Rose colored sunglasses just hit another in-the-park home run. What does that even mean? It means my model is running like a champ:

We’re neutral at the moment, inside yesterday’s normal print.  The pocket below is a risk here, but at some point I expect to see us revert back to value 4617 before we ultimately decide our fate.  Here’s today’s switchboard:

Nasdaq futures are a touch higher as we head into Thursday’s trade. We spent most of the session building value higher but sellers managed to defend yesterday’s range high.

At 8:30am initial/continuing jobless claims came in better than expected. There was little reaction to the news. We also have leading Index at 10am and natural gas storage data at 10:30am.

Yesterday we printed a normal day. Normal days are characterized as having a wide initial balance (first hour of trade) that is not breached for the remainder of the session. These day types are usually formed when a news item is released near the open. In yesterday’s trade, for example, investors were digesting the earnings from Apple. This day type shows other time frame (OTF) activity at the open but then no initiative-type OTF for the rest of the session, just local-to-local trade.

The action did manage to close the 7/16 open gap, meaning there are only 4 open gaps left below.

Heading into today, my primary expectation is for sellers to push in to the overnight inventory and close the gap down to 4618.25. From here the overnight low becomes a target 4617 then a push down to test value area low zone 4608.50 to 4606.

Hypo 2 buyers sustain trade north of the key pivot at 4623 setting up a ‘pole climb’ up to 4660 and seek to target the Apple gap up at 4668.25.

Hypo 3 sellers push down through 4605 setting up a liquidation down through the air pocket to 4584.

Levels:

My early morning ambition for a pole climb was squelched after filling out the switchboard. One hour into the day and a normal range had already printed. The board has always been part of my daily routine but kept private. No longer shall it be! From the onset, blogging has been an endeavor of transparency.

Ideas are worthless. I can share every tool in my repertoire without the risk of obsolesce because it all comes down to execution. It is a hard lesson taught on a cold day when you break your plan and trade on gut motive.

So goes any action in business. Let observation pique your curiosity, emotion ignite your life fuel, but data drive your decisions.

FINAL OFFER before Fly rescinds my headline position—choose science today. Email your top 3 stock or ETF tickers to [email protected] before you even open your trading platform and I will run them through Exodus to see where the overbought/oversold levels are.

The Fly turned over headline power to yours truly, and I intend to foster the populace during my short stay on top.

Let’s dig into algorithmic stats. Send any 3 stock or ETF tickers to [email protected] and I will ping you back their overbought/oversold levels.

Let the prowess of Exodus judge the potential opportunities ahead. I commend your valor—let it be fortified with data.