Daily Analysis - Monday, 12/9/24

There was a very modest amount of new business on Friday, 12/5. Can the trend continue?

Dec 09, 2024

This publication and its authors are not licensed investment professionals. Nothing posted on The Shmuts blog should be construed as investment advice. Do your own due diligence and research.

Prior Day Stats and Thoughts - Fri, 12/5

Reference Points

Session Open: 21,450.00
Session High: 21,669.25
Session VAH: 21,661.00
Session POC: 21,636.00
Session VAL: 21,612.75
Session Low: 21,424.75
Session Settlement: 21,656.75
OI Change (Prelim): +1,862 (NQ) / +3,060 (MNQ)

Thoughts

Very prominent “P” shaped Trend day. Friday’s session opened within value from the prior session and immediately auctioned higher with a lot of strength during the first A period. In B period, it topped out around 21,650 and then retraced, chopping back and forth during B, C, and D periods where it tested below the 21,600 level and was rejected. Price then chopped back and forth for the remainder of the day. Price did try to break out in M period going into the close but was rejected as well.
My review of the day is we had other timeframe participants aggressively auctioning price higher above 21,600 off the open with very little resistance from sellers then price found fair value and trade was facilitated in what was perceived as value for the remainder of the day.
For a trader the best trade location was long off the open but since we opened in value from the prior session this would have been a hard trade to take with confidence. If traders continued to get long up above 21,600 they likely would have become frustrated in the chop for the remainder of the day. Breakout and momentum traders likely did not have a good day in Friday’s session. Momentum traders would have had to take quick profits in the relatively small trends that developed in the range. In hindsight, range trading may have netted better profits however the range was very tight in the value area (approx 40 points) and risk of a breakout in either direction would have been high for a small range.
If a trader did not catch the initial drive upwards, it was better to sit on the sidelines and watch for another breakout to occur and protect capital.

Thesis for Today - Monday, 12/9

Overnight inventory is largely flat, at the time of this writing slightly below Friday’s settlement price of 21,656.75. If this continues we will open in-balance.
My bias today is Neutral. We saw a large amount of old business leave both the NQ and ES markets on Thursday, 12/4 and a very modest amount of new business come back in on Friday, 12/5. Given the extended uptrend we have seen over the last 7 days, it does show signs of slowing down.
Be patient today, wait for good trade locations, likely later in the session. NQ’s price action has not been clean the last 2 weeks and very tough to trade. For less experienced traders it may be better to sit on the sidelines and let things calm down a bit, especially with contract rollover coming up very soon.
My trade plan today is to be patient, wait for a breakout of existing structure and acceptance, then trade the trend OR look for a rejection of the breakout and trade the range that likely develops.