Daily Analysis - Friday, 1/10/25
Wednesday's session was a largely sideways, choppy day. NQ is nearing the bottom of its range near the key 21,000 level. Will it retest it? And if it does, will it find support once again?
Disclaimer
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 research.
News Events this Week
Today - Friday - 1/10/25
8:30am EST - US Unemployment Rate (Expected: 4.2%, Actual: 4.1%)
8:30am EST - US Nonfarm Payrolls (Expected: 153k, Actual: 256k)
8:30am EST - US Average Earnings YoY (Expected: 4%, Actual: 3.9%)
10:00am EST - University of Michigan Sentiment Prelim (Expected: -)
Prior Session Stats and Analysis - Wednesday, 1/8/24
Session Open: 21,355.75
Session High: 21,431.75
Session VAH: 21,393.75
Session POC: 21,346.50
Session VAL: 21,300.00
Session Low: 21,166.25
Session Close: 21,360.25
Session Settlement: 21,360.75
Session Range: 265.5 pts, 1062 ticks
OI Change (Prelim): -214 (NQ), -2,924 (MNQ)
Prior Session Analysis
On the the higher level chart NQ is still in its range that extends between 22,100 and 21,000.
21,000 is a key level, it was major level of resistance for quite awhile back in Oct and Nov of 2024. The market auctioned up and through it decisively in late Nov with one last retest right around Thanksgiving, then continued to auction upwards to put in all-time highs before auctioning back down and settling into the aforementioned range it is in now.
Right now NQ is nearing the bottom of the current range and will either retest 21,000, or head back up and retest the 22,100 area. This is just simply what markets in ranges do, participants test each end of the range until something happens to cause the other side to want to conduct business outside the bounds of the range and a new trend develops.
My bias in these two scenarios is that we will retest 21,000. There the market will either find support once again and reject back up to retest the top, or a catalyst, such as jobs data or a macro event, will cause the market to auction down through that level.
If NQ does break down through 21,000 it has room to fall. There does look to be some past level of support around 20,780 and then a fairly sizeable gap down to around 20,275.
Wednesday’s session was a Neutral day with small range extension on both sides of the Initial Balance.
There was a lot of chop during the session which made for messy trading for momentum trading and a great trading setup for range trading.
There was a large selloff during the 12pm TPO which found support and subsequent retracement right in the area of a naked point of control that had existed in the market since Jan 2nd.
This bounce off the support area between 21, 190 to 21,170 auctioned price back up into value and sellers ultimately rejected price going higher around the 21,420 to 21,430 area.
Settlement price in Wednesday’s session (21,360.75) was almost exactly at the same settlement price from Tuesday, 1/7’s session (21,359.75). This gives further evidence of a market that is balancing and waiting for more information before moving in either direction. That new information could come in the form of unemployment and payroll data this morning.
Plan for Today - Friday, 1/10/25
At the time of this writing jobs data has come in positive which the market I predicted the market would take as negative. Prior to the news release overnight inventory was largely flat. It has now turned short and we are set to open with a gap to the downside and out-of-balance from Wednesday’s session.
Gap rules still apply even with the negative catalyst. Sometimes in the market, the initial reaction is not the lasting reaction. We won’t know for sure until the NY session opens at 9:30am. My bias today is bearish.
Trading Plan for Today:
Bullish: We have quite a few areas of high volume and potential resistance above the current price. In the case price auctions up today the levels I will be watching are:
21,430 up to 21,445: Wednesday’s high up to a level of resistance from Wednesday’s overnight session.
21,515: this is a substantial area of volume going back quite awhile, these large volume nodes tend to slow down price and it gets “sticky” at these levels. It will be a key level to break through if price wants to auction higher.
Bearish: Jobs data released this morning, Unemployment and Payroll numbers could be a key catalyst for volatility. Since the Fed announcement of fewer rate cuts, we have moved into a a “bad news is good news” time for the market. Any positive employment data for the economy is bad news for the market. This is because better economic data is more likely to cause an even lower chance of the Fed continuing with rate cuts in 2025. I expect a bearish reaction to positive employment data. In the scenario where price auctions down today, the levels I will be watching are:
21,220 - 21,000: Yesterday’s low around 21,220 has been a key level of support in prior sessions and a large area of volume. Volume drops off significantly below this level until you get down to 21,000 which has been a key level of support as shown in the higher timeframe chart above.
20,780: Mentioned above, its the first area of the chart going back to late 2024 that shows any significant support for price. Volume is fairly modest here, I wouldn’t expect it to be a major support level.
20,275: There is a large gap in structure and volume between this level and the higher level at 20,780. The market would also be in a risk off, negative gamma situation for equities at this point and volatility could be substantial.
"Stick to your plan. Plan your trade and trade your plan." – Linda Raschke