Daily Analysis - Friday, 12/27/24
NQ traded in a tight range yesterday above the 22,000 level on a low-volume day. Today is expected to be another low-volume day; will we see another push higher?
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.
Market Holiday Schedule
New Year’s Eve, 12/31/24 - NQ Market closes @ 5pm EST
New Year’s Day, 1/1/25
NQ Market closed for the 1/1/25 trading session.
NQ Market opens at 6 pm EST on 1/1/25 for the 1/2/25 trading session.
Prior Day Stats and Analysis - Thursday, 12/26/24
Session Open: 21,961.50
Session High: 22,076.25
Session VAH: 22,050.75
Session POC: 22,003.75
Session VAL: 21,975.25
Session Low: 21,870.25
Session Close: 22,007.25
Session Settlement: 22,008.00
Session Range: 206 pts, 824 ticks
OI Change (Prelim): -2,027 (NQ) / -666 (MNQ)
Market Profile Analysis
Yesterday’s session was a Normal Variation day. We saw range extension to the upside after the Initial Balance was set. Other timeframe participants were in agreement throughout the session on fair price, as evidenced by the tight range of trading and significant time spent in that range from Noon to close.
The Value Area rotated to the upside from Tuesday, 12/24, and we saw significant reclaim and acceptance of prices above 22,000 in yesterday’s session. This acceptance above is a bullish signal, signaling that 22,000 is not just a psychological level; it also confirms that it should be a key level for upcoming sessions if it holds.
Regarding trading setups, yesterday’s session, outside of scalping, was a range trader’s day with a reasonably tight range to trade of approximately 80 points between 22,055 and 21,975.
Yesterday’s session volume of 408,648 was less than 50% of the regular session volume for NQ. This is due to the holiday break. I expect volume will not return to normal until after January 2nd. When volume is low, traders should exercise extra caution. If volatility occurs, it can be more extreme and move significantly with lower volume.
For December, regarding Open Interest, NQ is currently at a deficit of approximately -47,000 open contracts compared to the beginning of the month. This could be due to the contract expiration that occurred on Dec 20. For the uptrend in NQ to continue, we must see new business come in. Traders should monitor whether the deficit closes or continues to increase.
Thesis for Today - Friday, 12/27/24
Due to the holidays, I expect another low-volume day, and for that reason, my bias is Neutral today.
Overnight inventory is short at the time of writing this and has been below yesterday’s settlement price since the open of the 12/27 session at 6 pm. The current overnight price is below the 22,000 price level, and I expect that level may come into play again today once the NY session opens. If price is not able to retake 22,000, I expect a more bearish day today, indicating the market is in balance.
Given the low volume, I do not plan to trade today. For anyone who does, I recommend caution, taking A+ setups only, a “see money, take money” mentality with profitable trades, and a tight stop on losing trades. Without the typical volume in the market, aggressive moves by any participants will not have the typical volume to absorb those orders, so moves could be more extreme during this holiday period.
"The market is a device for transferring money from the impatient to the patient." – Warren Buffett