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Tag Archives: #NASDAQ

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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Super Balance

Markets pushed higher early this morning, and as we head into cash open price is entrenched in balance. Range is abnormally elevated on the overnight session and volume is close to abnormal too. The main feature of the overnight session is a 25 point rotation higher that hit right around 4am.

The Greek drama continues and at 7am Eurogroup Finance Ministers were set to meet.  At 8:30am Initial/Continuing jobless claims data, as well as Personal Income/Spending data were out and the initial reaction to the news is some slight selling. Also on the docket today is Market Composit PMI at 9:45am and Nat Gas Storage data at 10:30am.

Yesterday we printed a neutral extreme day, and quite an interesting one. Price went up and took out the prior swing high and order flow dried up. We spent the rest of the session working lower and went out near the session low.

This action followed what has been a frustrating week for bears. We started Monday with a big gap up and sellers have struggled to fade it. Instead we are churning and accepting these higher prices.

The result is a well-defined value area that we can work with. It spans from 4545 – 4511. The more time we spend inside this balance, the more likely it is to resolve higher and in congruence with the higher time frame trend.

Heading into today, my primary expectation is for buyer to push on the open to target 4541. From there I will look for sellers to defend the high end of value and two-way trade to ensue.

Hypo 2 is sellers push into the overnight inventory and close the gap down to 4514.50, setting up a test of VAL 4511. Look for buyers and two-way trade to ensue.

Hypo 3 sellers close overnight gap early, selling pressure persists, and we push to test the century mark 4500. Look for a liquidation if we pierce the air pocket below 4498.50.

Hypo 4 strong buyers, push up through 4545 and continue on to test above yesterday HOD 4555.25 to target measured moves at 4557 and 4565.75.



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Three Possible Outcomes for Today’s Trade

Nasdaq futures are a touch lower as we round the bend into cash open. The session featured normal range and volume while trading inside of yesterday’s range. This suggests we are in balance and nothing overnight changed that. The overnight profile features a weak low and the predominant feature of the session was a 16 point rotation lower around 5:30am, otherwise the session yields little clues on the day.

At 8:30am a buffet of economic numbers was delivered—most coming in-line or slightly better than expectations. At 10:30am we have crude oil inventories and at 2pm it appears a Greek Summit meeting is taking place over in the Eurozone.

Yesterday we printed a normal variation down but saw little initiative selling after going range extension down. Instead we grinded back up into the balance formed by Monday’s neutral day. Starting the week with a big gap up, after starting the prior week with a big gap down, may make participants hesitant to chase price higher. However, the longer we can hold balance up here, building acceptance of these prices, the more likely it becomes that we test contract high and explore for buy stops.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and close the gap up to 4541.25. From there I will look for them to take out overnight high 4545.75 setting up a move to target 4557 then 4565.75. Stretch targets are 4579.50 and 4596.

Hypo 2 buyers struggle while closing the overnight gap and we push down to take out overnight low 4526. Look for price to continue lower and look for buyers around 4511.75 then continued balanced trade.

Hypo 3 sellers push down through 4511.75 to target the 4500 century mark. If they can push trade below 4498.50 look for liquidation to take hold, and a fast move down to 4465.25 with a potential gap fill target down at 4454.



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Overnight Action Quite Calm

Nasdaq futures are priced to gap up slightly heading into Tuesday. The overnight session was a balanced-two way chop along yesterday’s midpoint. The range printed is normal on abnormally low volume.

At 8:30am Durable Goods data came in weaker than expected, and at 9am House Price Index did too. The initial reaction to both news items is selling. Also on the docket, we have a morning loaded with low impact events including Markit Manufacturing PMI at 9:45am, New Home Sales at 10am, and Richmond Fed at 10am as well.

Yesterday we started the week with a big gap up after news out of the Euro zone sent world equity markets higher. The Nasdaq managed to close the open gap it left behind from May 28th during the opening trade. Buyers briefly became initiative, pushing us range extension up, before responsive sellers stepped in and pushed us neutral.

Heading into today, my primary expectation is for a choppy open. The flurry of news items and balanced overnight session suggest we chop between 4545.75 – 4531.75 before heading higher to test above yesterday’s HOD 4552.25 to target a measured move up to 4557, then 4565.75.

Hypo 2 sellers break the balance to target the MCHVN at 4512.75. Look for responsive buyers at 4509.75 otherwise the open gap down at 4499 becomes a likely magnet.



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A Heaping Dose of NASDAQ Context to Start The Week

The futures were active overnight, albeit slightly quieter then we have seen in recently.  We do not have any major premarket news on tap, thus our early analysis should hold relevant into the opening print.

As the USA comes online, the equity futures are trading slightly lower with the NASDAQ down 1.5 and the S&P down 0.75.  For the duration of this post, I will be focusing on NASDAQ futures via the /NQ contract.

We came into last week on the tail of strong sell flow from the week prior.  A gap lower on Thursday the 01/23 resulted in an odd print because afternoon strength took prices to the high of the session at the close.  The next day we gapped lower and printed a trend day down.  This marked the beginning of sellers taking control of the intermediate term auction.  We continued lower on Monday before finding some responsive buyers in what I perceived as panic trade lower.  The rest of the week the market began balancing out, and by Friday the intermediate term control was back in balance.  I have pictured the above commentary on the following chart:


The trading has been framed within the context of the sentiment cycle chart option addict introduced and often referenced.  I have been under the impression that action quickly worked through discouragement and climbed the wall of worry before ultimately printing aversion on Friday morning where we bought the dip.  If this is the case, I want to see quiet market action over the next few days—denial taking hold.

The other possibility is we have not even begun to see panic.  If this is the case, the market should accelerate rapidly to the downside, soon, blowing through intermediate term and long term control.  This is very much a possibility and a would be remiss to ignore this possibility.  I have a line in the sand at 3440.50 but should price begin accelerating violently to the downside, I may begin reducing exposure well before then.  Let’s run through who controls the auctions on various timeframes:

Long term control: buyers—this can be seen as a series of higher highs and lows on a weekly chart.  However, the daily chart is not as pristine as it was from October to now because we have made a lower low verses late December-to-early-January

Intermediate term control: BALANCE—we have a near-perfect bell curve intermediate term.  It is 87.5 points in range with a VPOC at 3494, which is slightly below the midpoint at 3498.

Short term control: buyers—buyers were able to get price back above the 33ema and hold value within the higher print.  This can be seen on the following chart, where the last two days of market action migrated value higher:


Overnight control: BALANCE with a slight seller edge—we have printed a bell curve overnight.  The sellers had a slightly better rotation factor then buyers.

Net of all of this context, you can see there is a power struggle going on, with balance dominating the conversation.  Thus we must monitor intermediate term balance.  The open is key too. It can give us early cues of who is in control on the day.  Is it two-timeframe action, back and forth, or do we see a strong drive from the long term buyer control?  Or does the seller come in and drive lower for an hour, reasserting their control on the intermediate term?

The key, in my opinion, is velocity of price movement, and the following value and its relevant levels:



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All About The NASDAQ

Friday we experienced a trend day down in both the NASDAQ and the S&P, with equities trading as correlative instruments to other macro products.  This corrective-type trading was different in behavior from recent trade, and the selling pressure was dynamic enough to push the S&P out of intermediate term balance dating back to 12/20.  What I find interesting however, is that the NASDAQ futures have not been pressed outside of the intermediate term balance dating back to the same date.

There are a few other divergences.  The volume price of control for the NASDAQ never moved to its uppermost distribution.  Instead is stayed in the middle of the action at 3565.  I will be focusing on the NASDAQ as the market works though this correction, as it attempts to demonstrate relative strength.

First I have drawn out a volume distribution dating back 24 sessions to 12/20/13.  This set of trading days represents the intermediate term NASDAQ balance.  From it, I have highlighted the key high and low volume nodes to monitor:


If the NASDAQ is going to sustain trade within the intermediate term, prices need to hold 3495.25.  In the past, these lower regions have been the site of strong buying demand.  Should that not be the case this time around, we may need to rethink our market stance.

The buyers are still in control of the long term auction, which can be seen on the daily and weekly composite charts (not pictured).

The trend down from Friday followed through for a bit in the globex session Sunday evening and into the morning, but buyers came in overnight and auctioned us higher.  Their actions left a tail on the overnight volume distribution suggesting responsive buying took place.  Early on, I will be on watch for a gap trade back down to 3531.50.  This would close the weekly gap and also take us back to the scene of overnight responsive buying.

I have a current upside algorithmic buy stop target of 3549.50 which coincides with a low volume node on Friday’s profile and an area of support that was converted to resistance during the final afternoon panic selloff.

To recap sentimental control:

Long term – buyer

Intermediate term – balanced with selling pressure

Friday – sellers, overnight – buyers.

Finally, here are the RTH profiles on the NASDAQ.  Note the plunging 33ema.  Price always returns to the 33ema.  Will price revert to value, or will value catch up to price?  See below:


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Watch This Deal Fly Off The Shelf

There was a strong appetite for risk over the holiday trade, which saw prices of the NASDAQ outpacing the performance of the S&P.  The action slowed a bit over these last 8-10 hours and the resulting profile print has a very familiar, uncompleted, shelf footprint.

By vision for today is a completing of the profile via some back-and-fill trade.  However, we are set to gap much higher, which signals the market is well out of balance.  If we fail to hold around the high volume node at 3476 it may signal a rejection of the holiday move by the market.  If this is the case, we may see a swift gap fill back down to 3469.

Conversely, the shelf at 3476 may not breach in which case price will continue to probe higher in search for sellers.

The shelf is an interesting bit of context to bring into today’s trade.  Even the casual observer, hunting black Friday deals can use the price action around the 3481 shelf zone to measure sentiment.

I have highlighted this activity on the following market profile charts:


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NASDAQ In The Zone

Price in the NASDAQ futures is nearing the zone where we saw the large breakout last week.  Last Wednesday, just before ramping higher, the market printed a well-defined low volume cave surrounding 3360.  To my eye, if the market accepts price below this level (spends an hour or more below and builds volume-at-price) then the sentiment introduced to the market last week is gone, and we should adjust accordingly.

Keep in mind however, that a mere breach of this level is not your tell.  Instead price needs to sustain below for a reasonable duration.  A VPOC establishment below the reference point would support the case for lower prices even further.

Up above we have a wonderful confluence of low volume and value area high at 3390.  This is the sellers’ stronghold, a level they defended well yesterday after thrusting us lower.  Trade above these levels would represent a bull victory as the market attempts to regain balance.

Overnight we were fairly balanced with a bit of sell flow which was faded this morning.  In determining whether the bulls can sustain control of this aged trend, I want to see the velocity of the market slow.  If we can consolidate sideways a bit slower then yesterday’s violent indecision, then that slowing of the market in and of itself would be constructive.

I have highlighted the above price levels, as well as drawn out a few normal scenarios on the following market profile charts.  Remember, normal does not always mean right, and a different type of day development would be another clue:


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