Nasdaq is trading lower premarket on a balanced structure and normal range and volume. ADP Employment change came in a bit lower than expected at 8:15am and prices saw little reaction to the news.

On deck we have ISM Non-Manufacturing at 10am, Crude-distillate inventories at 10:30am, and Fed’s Mester is talking at 12:45pm.

Yesterday the market went gap up after a strong bounce of the lows Monday only to see some early selling. Sellers pushed to test the afternoon rally and found responsive buyers who took us all the way though the initial balance to put a neutral. Buyers then sustained their strength into the close resulting in a neutral extreme print. This day-type is a high conviction day type for buyers.

Intermediate term, we are trading at the top end of a six-day range after a big gap down last week. This balance structure is inside an even larger balance structure dating back to late October. Compression-inside-compression.

Heading into today, my primary expectation is for sellers to try and push lower early on and test the LVN at 4189. Here I will look for responsive buyers who work toward closing the overnight gap up to 4215.25. Stretch target is a move up into the above gap and a targeting of the MCHVN at 4233.25.

Hypo 2 is sellers push through the LVN at 4189 and test through the pocket and down to the 6-day mCVPOC at 4178.75. If buyers are not found here then a continued move lower to test yesterday’s low 4166 and a revision to the October MCVPOC down at 4144.50.

Hypo 3 is buyers press up and close the gap to 4215.25 and push above 4233.25 to sustain a drive up to close the gap to 4269.25.

These levels are highlighted on the following volume profile chart:

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Nasdaq futures are up a few points as we head into cash open. The overnight session featured 1^st sigma range and volume (normal) trading in a balanced manner. Price extended above yesterday’s range and formed a weak, double top at 4203.25 which was also the swing high on 1/30.

Yesterday we had strong early selling which slightly exceeded our 1/29 low 4095.75 before finding a strong responsive buyer. The responsive buyers stepped in before 10:30am thus preserving the initial balance. Buyers then transitioned to being initiative in behavior in the afternoon and made a strong secondary push to close out the session.

Overall, the last 5 days of trade are overlapping but the last three in particular form an interesting view of balance. Given the week overnight high and the quality low below, my initial expectation is for price to work higher and take out the overnight high 4203.25 and continue higher to test the MCLVN 4209.50. The upper target for this move is the MCHVN at 4233.25.

Hypo 2 is a gap fill down to 4183.75 then a move up toward overnight high 4203.25.

Hypo 3 is sellers push into the overnight inventory to close the gap to 4183.75 and push through to take out the overnight low 4165.75 setting up for a move back to the MCVPOC at 4144.50.

Hypo 4 is a drive higher, take out 4233.25 early and work up toward the open gap to 4246 then 4269.25.

These levels are highlighted below:

Keep these economic events on your radar too:

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Nasdaq futures are up a bit as we head into the cash open. The overnight session was on the low end of normal range and volume in a balanced session of trade. 8:30am we head Personal Income/Spending stats, we have 9:45am Markit Manufacturing PMI, and 10am Construction spending and ISM Manufacturing. XOM is trading flat after reporting earnings trhis morning.

Friday the Nasdaq gave back about half of the rally it had Thursday from oversold conditions to settle right at the MCVPOC of our large intermediate term balance dating back to the end of October. The market is trying to explore lower prices on the short term and is did an okay job of it last week with a gap lower and so far a lower high.

Early on, my primary expectation is for sellers to come in and work the overnight inventory toward a gap fill down to 4144.75. After some two way action we continue lower to target the overnight low 4129.25 and then the NVPOC at 4121.25.

Hypo 2 is buyers push off the open and work higher to 4173.50 and then stretch to 4181.25 where we find responsive selling back toward the gap fill 4144.75.

Hypo 3 is a early drive higher above 4181.25 and continue higher to test Friday’s high 4203.25.

There levels are highlighted on the following volume profile and market profile charts:

 

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Nasdaq futures are lower as we head into cash open on an abnormal 50 point range and normal volume. At 8:30am the GDP data released was below expectations and we saw a brief pop in futures which was ultimately faded. As we come into the opening bell prices are on the low of the globex session.

Yesterday buyers were put on their heels early in the session as price pushed down into the lower edge of a multi week range and managed to turn. Price then took back more than half of the selling on Wednesday to finish the day up near the highs. Overall the week has been seller dominated since the big gap down on Tuesday.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and work up to 4171.50. Here I will be looking for signs of responsive sellers (responsive relative to the opening print, initiative in nature verse yesterday’s close). They will look to target the MCVPOC at 4144.50 where we will churn through lunch.

Hypo 2 is sellers drive off the open push down through MCVPOC 4144.50 down to 4125.75 where we find responsive buyers back up to MCVPOC 4144.50 and churn through lunch.

Hypo 3 is stronger buyers push on the open, take out 4171.50 and target a full gap fill up to 4185.75. If they can sustain price above 4171.50 then look to target overnight high 4208 and stretch target of MCHVN 4233.25.

Hypo 4 is a drive down, take out 4125.75 and target a break of Thursday’s low 4095.75.

Levels:

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Nasdaq futures printed a balanced session overnight on normal range and volume. After a brief pop late Wednesday evening, price pushed lower and took out Wednesday’s low 4123.25 and found responsive buyers just ahead of the 1/20 low at 4109. Since then price has traded in a quiet 2-way manner. Earnings have sent the share price of BABA lower as well as CELG. COP is trading a bit higher. We have reports out of GOOGL and AMZN after market close. The Initial/Continuing jobless claims data at 8:30am came in a bit better than expected and we saw a bit of buying on the news.

Turning to the charts, sellers are in control on the short term timeframe. Yesterday we printed an outside day after starting the day gap up above Tuesday’s range and trading all the way though it and closing on the lows. Intermediate term is neutral as we continue working through a multi week range.

Just below the overnight low 4111.25 are some interesting price levels dating back to the last swing low. In particular, the naked VPOC at 4101.25 which we left behind when we turned upward. This level will be interesting to observe if sellers step in this AM.

Early on my primary expectation is for an open auction inside Wednesday’s range which gives way to selling. Sellers will look to take out the overnight low 4111.25 and continue down to test the NVPOC at 4101.25 where we find responsive buyers who work back into Friday’s range and up toward the MCVPOC at 4144.50.

Hypo 2 is buyers push early on and stall out near the MCVPOC 4144.25 churn a bit, before initiative sellers step in and work us lower to target overnight low 4111.25 and potentially the NVPOC at 4101.25.

Hypo 3 is an open drive higher, take out the MCVPOC at 4144.50 and continue higher to test the scene of the FOMC breakdown up at about 4172.

Hypo 4 is we drive lower and take out the NVPOC at 4101.25 and tag the MCLVN at 4083.25, if no responsive buying there then continue lower to the CHVN at 4053.75.

I have highlighted the above levels on the following volume profile chart:

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Several weak economic data points, weak reaction to earnings in MSFT and CAT and PG, and overall sentiment have the Nasdaq down over 50 points as we approach cash trade. This is pro gap territory. Interestingly, though the range is 2^nd sigma aka abnormal, it took place on a normal amount, or 1^st sigma volume. Typically these big down sessions carry some heavy volume.

At 8:30am Durable goods Orders came in much lower than expected. At 9am we have the Case-Shiller Composite, at 9:45am Markit Composite/Service PMI, and at 10am Consumer Confidence, Richmond Fed, and New Home Sales. After the bell we will hear earnings from Apple.

The NYSE is invoking Rule 48 on the market open, which may make for a choppy open.

Value started to overlap between Friday and Monday but heading into the close it seemed the market was not doing a very good job rolling over. Sellers did manage to take out Friday’s low and we had some excess wick on the upper end of the candles, but value was holding. However the overnight session has pushed us down below the Sunday-Monday Globex session low and back to where prices were the morning we heard from the ECB. It will be interesting to see if the buyers defend this level so soon after capturing it.

Early on I am looking for buyers to work into the overnight inventory and push up to the naked VPOC at 4226.50. In this level I expect to see sellers stepping in and defending and then pushing back lower to take out the overnight low 4202 and test deeper into the morning of the ECB, targeting 4171.50.

Hypo 2 is gap and go drive down. Sellers drive off the open and push through Thursday’s range to test the low at4164.50.

Hypo 3 is choppy, 2-way trade through much of the session as the market pauses ahead of AAPL earnings and tomorrow afternoon’s FOMC meeting.

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Buyers are showing some aggression as we approach cash open in the Nasdaq. The session started off weak Sunday evening with some attributing the move to the outcome of the Greek elections. The move lower around 6pm Sunday took place on light volume and buyers defended the upper edge of value formed Thursday afternoon. Once the globex auction turned around it spent the rest of the session slowly churning higher.

This week’s economic calendar starts off slow and builds in complexity. We have tons of earnings out and a heavy calendar of economic stats. Today we have Dallas Fed at 10:30am and Microsoft reporting after the bell.

Taking to the charts, we can see the Nasdaq went on a four day unidirectional streak to the upside, with Friday’s profile forming a balance on top of the range.  Typically after three days of trade in one direction we start to see price action become more two-way. After four days it becomes even more likely.

Price has so far managed to push up to the upper third distribution of volume. The current micro composite structure as we form this big range has three distinct areas of value with air pockets in between. These air pockets zones are where we see the dramatic, discovery-type moves take place. We could see downside action gain speed, given our current location. See below:

So far sellers are defending the upper region of value. Whether they can continue doing so will be my primary focus this morning. My primary expectation this morning is for a choppy, two way auction on the open with sellers a bit more aggressive. They work to fill the overnight gap to 4268 and test the lower end of Friday’s value 4255-4253.75 where we see responsive buyers. These buyers than work up toward the MCHVN at 4285.25 and potentially test above Friday’s high to tag the HVN at 4293.50.

Hypo 2 is buyers active, perhaps not allowing the overnight gap fill to 4268 before making a move to take out Friday’s high 4286.50 and testing up to 4300 where we find responsive sellers and balance out.

Hypo 3 is sellers extend below 4254 and work down through the air pocket to target the overnight low 4231.50 and the naked VPOC below it at 4226.50. I have highlighted my key market profile levels below:

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Yesterday afternoon we started to see a behavioral shift from the marketplace. The Nasdaq slowed down and flagged about, much like it did last Friday. The violent waves as we explored the southern tip of the charts opened up to a peaceful, calm, quiet pond. Whether this behavior sticks is unknown but the change has so far carried over into Globex. Overnight the Nasdaq traded on the low end of its normal range on normal volume. Prices drifted above yesterday’s cash highs briefly before finding responsive sellers.

Last night the biggest post-earnings price action was seen in SBUX which traded higher after reporting. At 8:30am we had Chicago Fed Activity and it brought some selling in. At 9:45am we have Markit PMI stats set for release. This announcement shortly after the open may induce some early chop. We also have Existing Home Sales and leading indicators at 10am.

Yesterday was the third straight day of advance in the Nasdaq and price action tends to become a bit rocky on the fourth session. However, bulls have done well to negate the intermediate term seller control, pushing us back into a more neutral-to-bullish stance. We are currently trading in the upper pocket of our triple volume distribution, see below:

Drilling a bit closer to the action, we can see prices are coming into the lower end of a large balance area above. It makes sense to expect some overhead supply in this region. Given the pocket-nature of our current trade location, we might still see some speed in the market.

Early on, I am expecting a choppy open auction, inside Thursday’s range before buyers make an attempt at the overnight high 4275.25. Not far above there I will be looking for signs of responsive sellers who work us back below Thursday’s close 4266 and choppy-two way action takes hold.

Hypo two is sellers a bit more aggressive on the open, pushing us over the ledge at 4258.25 and sliding us down through most of the afternoon push higher to test it’s starting point down at 4235.

Hypo 3 is strong bulls push up through 4277.75 and begin exploring the upper balance zone.

These levels can be seen below:

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Nasdaq futures are lower as we head toward cash open. The range and volume associated with the move are about as normal as it comes, both falling right in the middle of their respective Gaussian distributions. Price managed to take out yesterday’s cash high 4175.25 for a while but eventually traded lower. Yesterday evening’s big surprise came from NFLX earnings, which propelled the stock much higher in after-hours trade. The Presidential State of The Union had little effect on index price. Just ahead of the 8:30am housing-type data we saw a run-up in prices which has subsequently faded off/traded flat since.

Yesterday we were gap up to start the week (on a Tuesday) and subsequently faded lower for much of the morning. It was only when price attempted to enter the value zone established when combining last Thursday and Friday that we saw a sharp responsive buyer. Their behavior was strong enough that it reversed the auction process in the opposite direction and we ended the day with a Neutral Extreme print.

The Neutral Extreme print carries strong directional conviction, second only to the trend, or, conviction day. Contributing to the validity of this structure was an end-of-day VPOC shift to the high end of the range. Calling the strength into question is cumulative delta, which, could not manage to stay positive.

Heading into today, my expectation is for buyers to push early on to close the overnight gap to 4167.25 then struggle a bit with 4171.50 before working to take out overnight high 4178.50 and targeting 4184.25 where we see sharp responsive selling.

Hypo 2 is sellers on the open work down to take out overnight low 4149 and target 4146 – 4142 where we see responsive selling and then an attempt at filling the overnight gap.

Hypo 3 is a stronger buying drive early on that takes out 4184.75 early on and opens the door to run up the zipper to 4229.75.

Hypo 4 is strong sellers take out 4142.50 and work back down into Tuesday’s lower distribution and target 4127.50.

These levels are on the following charts:

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Nasdaq futures are higher overnight on a slow-grind type session of trade. As we head into cash open sellers are recapturing some of the progress. The gap up to start the week has been a common feature the last several weeks; a common feature which gives way to selling. Whether that continues to be the case this week will be interesting to observe. Range is on the high end of normal for a globex session and volumes are running in the 2^nd sigma.

At 10am we have the NAHB Hosing Market Index as well as Fed’s Powell speaking. The housing data may carry an elevated impact on market prices after the weak showing from the Residential Construction industry last week. Several of the premarket earnings came in well. After hours, two of the majors we will hear from are IBM and NFLX. We also have a Presidential State of the Union Address set for 9pm. More housing stats are set for release in the premarket tomorrow.

Prices are trading inside a big area of acceptance currently, the microcomposite VPOC sits right at 4144.50. These high-volume areas tend to produce murky, choppy trading action. On either edge of this value we have volume pockets which are where the greater opportunity for trend-like behavior resides. Overall, the intermediate term timeframe is neutral-to-bearish. See below:

Short term we are gap up with some magnets below. Early on my expectation is for sellers to push into the overnight inventory and take us back to the MCVPOC at 4144.50 and continue lower to close the open gap down to 4134.75. I will look for signs of responsive sellers here (responsive relative to the overnight session, initiative relative the Friday) who work toward taking out the overnight high 4168.

Hypo 2 is buyers enter aggressive early and take out overnight high 4168.25 and continue higher to 4184 and possibly trend through that area.

Hypo 3 is sellers close the overnight gap 4134.75 and continue lower to 4120 area. I have highlighted these areas on the following market profile chart:

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