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Tag Archives: $QQQ

The Old Negative News Cycle

If you go back and read my recent 2015 predictions you can find mention of a Euro-zone based negative news cycle. I suppose I was not expecting it to hit on the 5th day of the year, but these are the facts on the ground. We have an important economic release at 10am today (ISM Non-Manufacturing Composite). Keep in mind tomorrow afternoon’s FOMC Minutes too. These could lead to some choppy-directionless trade.

Heading into US cash open the Nasdaq futures market is flopping around the unchanged line after a busy evening. Volumes are elevated but normal and the price range was contained to the lower half of yesterday’s RTH range. The primary feature of the overnight session was a strong range rotation that occurred from 5:30am to 7am.

Sellers took us back to the scene of the crime yesterday while extending their down-day winning streak to four days. The gap left behind after the Fed rate decision in December was filed before we way signs of responsive buyers coming in. Heading into today’s session it will be interesting to see if sellers are able to take out yesterday’s lows and continue probing into large daily session from 12/17.

My primary expectation is for a choppy open, likely an open auction in range then a push higher to test 4167. This level was a big battleground yesterday but eventually resistance. If we can sustain trade above it then I will look for a test of the overnight high 4172.50 then MCLVN 4179. Any trade sustained above 4179 may signal a shift in the character of the auction from short term seller controlled-to-buyer controlled.

Hypo 2 is a push lower toward the overnight low 4149. There is a big high volume node just a tick below yesterday’s session low at 4144.75. The area was met with a buyer response yesterday and returning to it would likely mean we push through HVN and test the other side of this value which is 4135.25.

Hypo 3 is an early drive higher that spikes through overnight high 4172.50 and tests 4179.00 early. We find responsive selling higher which takes us back down to 4167 where buyers defend and press us back up to test Monday’s session high 4207.25.

You can see these levels on the following volume profile chart:

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Fresh Context Read – Treading on Thin Ice

Bulls are starting the new year off on the cusp of a gap zone in the Nasdaq, and as we approach US trade the globex market is pushing into it. Trade volumes have come back to life and showing overall health in the facility of trade overnight which bodes well for intraday opportunity.

This is the first Monday of the year and month and could feature some aggressive jockeying for position. It is wise to closely assess the price action and trade in the direction of the hardest punches. The economic calendar is quiet today with most trades setting their sights on Wednesday’s afternoons FOMC minutes and Friday’s monthly Non-farm payroll data.

The primary feature of the last few weeks of trade was a strong swing higher across most equity markets as we headed into and through the holiday season. Sparking the move was the FOMC rate decision and Yellen press conference on December17th. We went gap up away from this area and grinded higher before rolling back over before prior swing highs. The Nasdaq was the only of the 4 major indices unable to take out prior swing high.  See below:


Whenever a move is news driven our expectation is for a return to “the scene of the crime” by the market. It will be interesting to see if we do that today, or if instead the buyers step in ahead of this price gap.

The last 3 days of trade were weak and unidirectional down suggesting sellers are controlling the short term auction and the market is trying to find buyers strong enough to start an upward auction. The overnight session took out Friday’s lows and as we approach US cash open it is trading along the low end of its range. Sellers printed the largest rotation of the session between 7&9am as the US came online, a 13.50 point rotation to take out the prior globex lows.

My primary hypothesis is for buyers to make a push into the overnight inventory early on and target 4208.75. If they do not find sellers here (initiative in nature relative to Friday and responsive relative to globex), then look for a gap fill up to 4214.50 then a test of overnight high 4220.75 and possibly a move up to 4225.75. I will be looking for signs of responsive sellers at each of these levels who will seek to push us down through overnight low 4197 to target MCLVN 4179, range gap to 4173, and potentially a full gap fill down to 4160.25

Hypo 2 is a opening drive down which takes out overnight low 4197 and targets MCLVN 4179. If no strong buyer response here then continue to range gap 4173 then gap fill 4160.25 and a blow through to test the CHVN at 4144.75.

Hypo 3 is a variation of hypo 1 where buyers gain acceptance inside Friday’s range and then make a big secondary push up through Friday VAH 4225.75.


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The Friday That Feels Like Monday

Nasdaq futures are inching higher as we head into the new year of trading. Volume has normalized in globex leading me to suspect the quality of trade may resume during RTH as well.

There are some economic data releases to be aware of – at 9:45 the Markit Mfg PMI and then at 10am Construction Spending and ISM Manufacturing. These early releases may lend some choppiness to the early trading action.

The futures managed to hold the Wednesday lows overnight and push up through the poorly auctioned zone from 4262.50 – 4252 (pink box on chart). The buyers are defending the globex midpoint at 4248 as we approach the open.

Sellers took control of the short term auction this week after a balance day on Monday. Tuesday went gap down and when buyers responded and attempted to push us back into Monday’s range we saw a sharp rejection lower. When Monday showed afternoon follow through it suggested the intraday sellers had converted from responsive to initiative.

Wednesday they defended a gap and range extension up. Again they defended Monday’s value and then pressed us lower for the rest of the session resulting in a neutral-extreme print. Wednesday’s profile structure carries strong directional conviction with it, thus the sizeable gap up this morning is suspect.

The slightly longer, intermediate term timeframe resembles neutral-to-slight bullishness. We have essentially traded flat for the last three weeks.

Early on I will be watching for buyers to make a push through the thin zone for a test of globex high 4262.50. I will be looking for responsive sellers in the zone from 4262.50 – 4271.25. From there I suspect we could slide back down through the thin zone to test 4254.25.

Hypo 2 is sellers pushing into the overnight inventory early with a drive which is likely to target globex low and then work toward Wednesday low 4228.00. This opens up the auction to test the low volume node down at 4216.50 and puts the December 17th gap into play.

Hypo 3 we see buyers sustaining above 4271.25 and pushing a secondary leg up to 4285.25 thus regaining control of the short-term auction.

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


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Start The Countdown

The Nasdaq is hardly showing a pulse as we heading into trade this morning having traded only a paltry 6000 contracts so far. Range is low, prices are a bit higher and the primary feature of the session is an 11 point rotation up which was faded back to the mean of the session.

At 8:30am Initial and Continuing Jobless claims came out mixed and we saw little-to-no reaction from the market. At 9:45am we have Chicago purchasing manager index set for releases, this may lead to a choppy open, and then at 10am we have Pending home sales.

At 10:30am we have crude oil and gas inventory data followed by a noon read on natural gas inventories. The weekly energy announcements have been showing an elevated impact on not only the price of the commodities but also equities, thus, they are something to keep in mind as you navigate your trading day even if you primarily deal in stocks.

Turning to the charts, we can see the intermediate term coming into balance. This is seen as a series of overlapping value areas which I coagulate into a volume micro-composite (red-outlined, green value area profile on left).

Yesterday we opened gap down and when we tested higher sellers rejected us away from Monday’s range aggressively and targeted the gap fill down to 4281.50. If you recall this was yesterday’s hypo 2.

Sellers could also be seen actively defending the micro VPOC at 4295 which resulted in the second leg down. I emphasize this not to pay myself on the back but instead to show you the market has memory and this is not a random walk of price.

Toward the end of the session we saw some signs of excess low and then a sharp candle higher.

Today my primary expectation is for sellers (initiative in nature relative to the int term, and responsive relative to the overnight session) to push into the overnight inventory and close the gap down to 4283.50. Here I will look for signs of buyers who work back up to test the MVPOC at 4295, just abover the overnight high of 4294.25.

Hypo 2 is sellers become initiative and push through overnight low 4281.50 and test the lower end of intermediate term balance via taking out yesterday’s session low 4273.75 then 4271.25. If buyers are not present at this level then a continued exploration lower to the LVN at 4263.

Hypo 3 is the buyers blast through overnight high and MCVPOC 4295 and work to close the Monday-Tuesday gap up at 4313.25.

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


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Thin Landscape

Nasdaq futures are trading lower overnight as volumes continue to come in light on the globex market. Around 8:30am some chatter out of Russia resulted in a bit of a reaction from equity and gold prices, pushing the Nasdaq below Monday’s range and spiking gold higher.

At 9am the Case-Shiller Composite -20 data is due out and at 10am Consumer Confidence. The 10am news might cause some early chop before the market finds direction on the day.

The intermediate term is showing signs of coming into balance but still has a neutral-to-bullish skew. The monthly high is only about 20 Nasdaq points away and the quiet consolidation just below these levels increases the likelihood of a test up to 4323.75.

Early on I am looking for a bit of weakness to test the mcVPOC at 4295 where we see responsive buyers who work to close the overnight gap to 4313.25 and take out the overnight high 4318.

Hypo two is buyers push into the overnight inventory but get rejected away from Monday’s value 4309.50 and begin exploring lower to target a move down to 4295 and if they do not find responsive buying here then a continued move to 4285.25 and finally a gap fill down to 4281.50.

Hypo 3 sellers drive off the open and close the open gap down to 4281.50 early and continue testing lower to 4277.50, 4271.25.

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


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Three Days Left

Nasdaq futures are currently gap down a bit as we head into the final few days of trade in 2014. Volumes and range are both normal but on the low end of 1st sigma suggesting participation is here today but perhaps a bit light.

Sellers managed to print the two major rotations of the session. It looks like a bit of follow-through on the late-Friday selling. Overall the price action was contained inside of Friday’s range.

The intermediate term is neutral-to-bullish. We can see the market coming into balance (overlapping value areas) with the exception of Friday when price went exploring higher.

The high of Friday looks a bit vulnerable even though the market found some sellers late in the session. That initial impulse of selling Friday may have already seen its follow through during our globex session.

Early on I am looking for buyers to push into the overnight inventory and close the gap up to 4311.25. If buyers can sustain trade above 4304.75 then I will be looking for a push up to test overnight high 4320.75 and beyond to the prior swing high up at 4323.75.

Hypo 2 is a push lower to take out overnight low 4298.25 opening the door to target the mCVPOC at 4295 and Friday low 4293. If buyers are not found here then sellers will likely target last Wednesday’s VPOC at 4290 then a closing of the Christmas gap down to 4281.50. Expectation is we find responsive sellers down here.

Hypo 3 strong drive up, take out overnight high 4320.75 early and target the 11/28 gap fill up to 4333.

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


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Thin Ghost-Like Action

Good morning everyone. The overnight session has traded less than 3000 contracts so far on a drift up toward Wednesday’s high. The session features one rotation, said upward drift, which thus far has encompassed 14.75 points of range.

We are entering day 7 of the market on an upward auction, an auction which came into balance during days 3-6 and entered a sideways drift. Weekly Strategy Session readers, you may recall we were on watch to see if the big-range index volatility would persist of if instead we would tighten up and allow individual stocks to perform on their own merit. Thus far the week has shown signs of the latter.

With the right bit of chart massaging you can clearly see the balance formation we are currently trading within. This gives us parameters for a session that is likely to see 2-way, local-to-local type trading which favors scalping from the outside-in, like playing ping pong.

Up above the current balance are a few magnets; there is a naked VPOC at 4313.50 dating back to December 8th then there’s a weak high just above that at 4315.50.

Alternatively, there is a bit of a thin zone below the current balance which comes into play if we trade below 4271.25.

Primary hypo is to see an open auction inside range which tests above the overnight high where we find responsive sellers who work to fill the overnight gap down to 4281.50. If buyers are not found here then we continue down and resolve Tuesday’s gap at 4279.50. I will be looking for signs of buyers here as well.

Hypo 2 is an early push higher which works higher to 4307.50, then 4313.50 then finally targets a break of the poor high at 4315.50.

Hypo 3 is a rejected move higher which sees a fast move lower down through 4271.25 and slides down to 4254.25.

These levels are highlighted on the following volume profile chart:


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Volumes have officially dried up in the Nasdaq exchange. The overnight session traded sub 8000 contracts ahead of the 8:30am Durable Goods and GPD stats. The Christmas holiday is fast approaching. Session range was compressed to the low end of normal as well, ranging just a few ticks below 1st sigma and expanded a bit after 8:30am to become normal.

You really don’t want to force trades in this environment. It’s thin, primarily algorithmic participation.

Autopilot comes to mind.

However, if you are here, so am I and with the exact same intent.

Prices are high overnight after two primary up waves (9.25 and 12.5 points) pushed through the market. As we come into US trade prices are up in the upper quad of the globex range.

At 9:55am we have U of M Confidence numbers then at 10am we have Personal Consumption and New Home sales. The 10 o’clock hour also features the Richmond Fed Manufacturing Index.

Given the amount of economic news set for release at 10am, I am expecting a choppy, 2-way open.

Primary expectation is for us to chop about inside yesterday’s range before deciding on direction up to target Friday high 4304.50 then the MCHVN at 4307.50. There is also a naked VPOC up at 4313.50 which might attract prices. Then a weak high at 4315.50.

Hypo 2 is a drive higher to target the open gap up at 4333

Hypo 3 is an open rejection reversal where we attempt higher, find a strong responsive seller who rejects us back into yesterday’s value (4296-4290.75) and continues to test lower levels.

I have highlighted the levels I will be observing on the following chart:

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Stay Open Minded It’s The Holidays

Nasdaq futures are flat-to-lower as we come into US trade. Volume and range are coming in a bit light for the globex session suggesting the holiday week might reduce participation a bit. As we come into the open the overnight low shows signs of being weak.

The economic calendar is not too busy this week. Today we have Existing Home Sales at 10am. The announcement shortly after the open may be reason to chop about early on before the market finds direction.

We are set to open right at Friday’s VPOC suggesting the market accepted these prices over the weekend. There was a bit of liquidation into Friday’s close, this can be seen as a large red candle on the volume profile chart.

The microcomposite we are trading inside has two distinct value areas with a thin pocket separating the two. If sellers manage to press below 4271.25 this pocket may come into play.

My primary expectation this morning is for an open auction inside of Friday’s range with sellers pushing down to test the MCHVN at 4277.50 then the LVN at 4271.25. I will be looking for responsive buyers around here who work toward the 4285.25.

Hypo 2 is buyers pushing off the open to go after the overnight high and test Friday’s high 4304.50 and target the MCHVN at 4307.50.

Hypo 3 is a drive lower below 4271.25 and push through the volume pocket to test its mid 4254.25 and if breached then continue through to the other end and target 4245.75.

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


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OPEX Christmas Edition

Nasdaq futures are trading higher. The volume and range are normal and as we approach US trade the market has given back over half of the overnight progress. Coming into today we had an expectation for a green close on the Nasdaq based upon a 30-year study of seasonality. This day has a high probability of closing in the green.

The problem when you are not the one who builds this type of study is you don’t get to dirty your hands with the data. How much is it up on average? What did the red days look like? What years were they? What were the conditions leading into them? Etc, etc.

The largest rotation of the overnight session came around midnight when a motivated buyer caused a 29.50 point unidirectional rotation.

The economic calendar is quiet on this option expiration Friday, however we do have some Fed officials speaking. At 10am Evans will be given opening remarks in Chicago, at 11am Kansas City Fed MFG activity, and at 12:30 Lacker speaks on the economy in North Carolina.

Taking to the chart and looking to the left, we are trading inside the profile from 12/11 which was the roll forward day for futures traders. If you did not convert to the March contract that day then you missed a key piece of context that sparked the entire move lower.

On 12/11 we 1-ticked the local swing high and sellers made an aggressive push lower. In their wake they left a thin LVN zone from 4270-4282.50 and this is likely to be an interesting area of trade during today’s session (baby blue box on chart). Yesterday we also left a thin-auctioned zone. It is the baby-pink box spanning from 4249 – 4259.

Primary expectation this morning is for sellers to work into the overnight inventory initially. Open auction in range breaks lower to close range gap then full gap. If no buyers show here then a run at the baby pink box to test the pocket mid 4254.25. If that breaks than sellers will target the VPOC at 4245.50.

Secondary hypo is buyers press through the thin pocket above to target the naked VPOC up at 4287.75. Then look for a run at overnight high 4299.25.

Hypo 3 is more of a drive down, aggressive selling on the open takes out the entire pink pocket, slides through the NVPOC and retest the MCVPOC at 4233. Look for signs of responsive buyers here who work back toward yesterday’s close 4266.

The levels discussed above are highlighted below on the volume profile chart:


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