Daily Analysis - Friday, 1/17/25
Yesterday's session was primarily a sideways chop fest until a late auction down to the gap at 21,187. Overnight inventory is very long this morning, can it continue and break the downtrend?
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The Week Ahead
Today - Friday - 1/17/25
8:30am EST - US Housing Starts Number (Expected: 1.325M)
9:15am EST - US Industrial Production MoM (Expected: 0.3%)
Prior Session Stats and Analysis - Thursday, 1/16/25
Session Open: 21,494.50
Session High: 21,498.00
Session VAH: 21,441.25
Session POC: 21,388.00
Session VAL: 21,335.00
Session Low: 21,187.75
Session Close: 21,248.00
Session Settlement: 21,249.75
Session Range: 310.25 pts, 1241 ticks
OI Change (Prelim): +92 (NQ) / +3,557 (MNQ)
Prior Session Analysis
Yesterday’s session was a Normal Variation day with range extension to the downside.
There was a sharp selloff off the open then a very choppy, range-bound day until very late in the session.
Price auctioned down to test the gap mentioned in yesterday’s analysis (in purple) at the end of the session and rejected right before session close at 5pm.
Overall the price action was a mess, I did not take a trade in yesterday’s session. I had already shut it down by the time we saw that auction down late in the afternoon. I’ve learned as a day trader that if your setups aren’t presenting themselves, you make more money not trading. Discipline is key.
Open Interest was little changed yesterday with a very small addition of +92 contracts in NQ. That indicates to me combined with the price action that we saw a lot of two-sided trade yesterday between buyers and sellers. The selloff at the end of the day did not result in a loss of business so it’s probable that participants were buying into that selloff. Overnight inventory right now supports that theory.
Plan for Today - Friday, 1/17/25
At the time of this writing, overnight inventory is long, approximately 240 points above yesterday’s settlement. There has been consistent bullish price action since open at 6pm after testing the gap at the end of yesterday’s session and rejecting. Settlement price has served as support multiple times during the overnight session.
Price is still in range and value from yesterday, but is auctioning up towards the top of the value area. If it continues above yesterday’s range, we will open out-of-balance, if it rejects up here prior to open we will open in-balance.
In yesterday’s analysis, I cautioned against a bullish bias and stated that my bias around probabilities was short. That hasn’t changed. Price would need to auction and up and accept above 21,600 for me to begin to question that bias. Until that happens I view these upward moves in NQ right now as nothing more than relief rallies that will be sold until proven wrong.
Anything can happen in the market. Looking at the future news releases, there is not much market moving, other than employment data, that will be released between now and the next FOMC meeting on Jan 28th-29th.
Trading Plan for Today:
Bullish: If price breaks above yesterday’s range we will be out-of-balance and an opening range breakout trade higher will be something I will look for. Whether we open in-balance or out-of-balance, yesterday’s high and value area high as usual will be key levels I will watch for support or resistance and possible entries. Further above, we have some room to run above yesterday’s high, up to around 21,780. If we hold above yesterday’s high, there could be a really good long opportunity.
Bearish: Given how long we currently are overnight, I would not be surprised by a correction off the open to rebalance price lower. Any auction down today, whether off the open or later, will catch my attention due to the pattern of these rallies being sold. Levels listed above will all be watched for support. Below those, the gap starting at 21,187 is still in play as a major area of support.
"In day trading, your capital is your ammunition—don’t waste it on battles you can’t win." – Unknown