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Setting Up The Nasdaq for Another Greek Week

Nasdaq futures are lower heading into Monday’s trade. The 3-day holiday weekend came to an end with news that Greece citizens voted against the proposed referendum. The news sent US equity futures sharply lower when they opened yesterday evening. Since then we have printed an abnormal range, nearly 60 points, on abnormal volume. We’ve spent most of the session squeezing higher.

At 10 am we have ISM Non-Manufacturing Composite stats and looking forward we have FOMC minutes scheduled for release 2pm Wednesday.

We closed out last week churning inside of Monday’s big trend down range. The market overall showed signs of balance which, in a way, suggests participants were accepting prices lower. We’re heading into today within that range, but with a questionable globex swing low.

The chart looks like a giant crime scene, with 4 gaps littered across it. We’ll be opening right near the 6/30 gap, so that one will vanish leacing only the three overhead gaps.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and work the gap fill higher. Look to take out overnight high 4402.75 then attempt a full gap fill up to 4428.25 but stall out around 4416.50. Sellers defend this area and two way trade ensues.

Hypo 2 buyers stall ahead of overnight high 4402.75 and we push down through 4381.75 setting up a liquidation down to test overnight low 4344.

Hypo 3 full gap fill up, trade through to 4428.25 early and continue to test 4434.50.



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Working Another Pro Gap into Month-End

Nasdaq futures are priced to start month-end/quarter-end with a pro gap up. Prices worked higher for most of the overnight session and managed to print an above average range on above average volume. The action, overall, resembled an imbalanced drift higher and was confined to the bottom half of yesterday’s range.

At 9am the Case Shiller Composite was released and saw little reaction. At 9:45 we have Chicago Purchasing Manager, and at 10am Consumer Confidence. Overall, these economic events are likely to contribute to a volatile, choppy environment this morning.

Yesterday we came into the week pro gap down, an extreme gap that was driven by news over the weekend about Greece. After bulls mounted a half-gap fill they ran into sellers and the market rolled back over. We spent the rest of the session trending lower. There were signs of balance in the morning, but that quickly gave way to OTF selling. The volume was high at end-of-day and enough to shift the VPOC down near session low.

According to market profile theory, any entry in the direction of yesterday’s trend (short) is a risk free entry into today’s session because we are very likely to exceed its session low by at least a tick. Therefore my primary hypothesis today is for sellers to push into the overnight inventory to close the overnight gap down to 4380 setting up a test of yesterday’s low 4368.25. Look for sellers to target a move down to 4353.75. Look for responsive buyers north of 4347.25.

Hypo 2 buyers gap-and-go higher, stall out around 4411.50 and we roll over and close the overnight gap to 4380, test below yesterday’s low 4368.25 and quickly find responsive buyers and two-way trade ensues.

Hypo 3 buyers push up through 4414.25 and we work through the upper distribution to target 4430 then a stretch target of 4440.



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Starting The Week Pro Gap Down

Nasdaq futures are down as we head into the holiday shortened week after news from Greece began to deteriorate over the weekend. Futures opened and immediately pushed gap down to 4400 before a well-balanced, 2-way trade ensued. Volume is abnormal but not breaching the extreme 2nd sigma threshold. The range on trade post-gap down is elevated, but including the range of the gap we have extreme 2nd sigma range.

I envision this Greek news slowly fizzling out this week, but as for today, it’s likely to be of elevated importance. With headline risk high, we may see less impact to today’s only economic event—Pending Home Sales at 10am. Keep in mind, we have NFP data out on Thursday instead of Friday due to Independence Day (USA#1).

Last week we started with a big gap up and essentially spent the rest of the week fading it lower. On Friday liquidation accelerated through an air pocket present on the profile before finding responsive buyers to end the week.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and test higher. Look for sellers to defend 4446 and two way trade to ensue, north of the overnight low 4400.

Hypo 2 buyers push up through 4446.75 and continue higher to 4467. If they can breach this levels as well, look for a throwback to the scene of the crime, the open gap up at 4481.75. Note, this is pro gap territory—thus attempting to fade it is an effort requiring “professional” resources. The half gap scenario above is more likely.

Hypo 3 we take out overnight low 4400 and test below prior swing low 4386.50. Look for responsive buyers otherwise liquidation grip the market and sellers push to target 4353.50.


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