Daily Analysis - Friday, 1/24/25
NQ had another positive day yesterday following SPX and ES without substantial new business. Will that new business show up today to drive price further up or are set for a pullback?
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.
The Week Ahead
Today - Friday - 1/24/25
9:45am EST - US S&P Services PMI Flash (Expected: 56.5)
9:45am EST - US S&P Manufacturing PMI Flash (Expected: 49.9)
10:00am EST - University Michigan Sentiment Final (Expected: 73.2)
10:00am EST - US Existing Home Sales (Expected: 4.2M)
Prior Session Stats and Analysis - Thursday, 1/23/25
Session Open: 21,888.75
Session High: 22,050.50
Session VAH: 21,980.50
Session POC: 21,953.00
Session VAL: 21,910.00
Session Low: 21,866.00
Session Close: 22,041.75
Session Settlement: 22,038.25
Session Range: 184.5 pts, 738 ticks
OI Change (Prelim): +273 (NQ) / +1,359 (MNQ)
Prior Session Analysis
Yesterday’s session was a Normal Variation day with significant range extension due to a late spike.
The bulk of time was spent in the middle of the range, and thus, that is where the fairest value was found.
The overnight session before yesterday’s NY session tested the gap below (highlighted in purple), found significant support, and off the open price rallied throughout the day with minor pullbacks.
Trump moved the markets yesterday with his comments that he would prefer not to put tariffs on China. The SPX rallied to new highs on the news, and the ES & NQ followed but have not yet set in new highs.
We did see a small amount of new business come into NQ yesterday, +273 contracts, which is not a significant amount. Still, more importantly, it was not another day of losing business.
For now, I will be watching if NQ can take out the prior high from Dec 26th, which is 22,111,25.
Plan for Today - Friday, 1/24/25
At the time of this writing, overnight inventory is short by -30 points from yesterday’s close but above yesterday’s value area and still in range. The late-day spike raised the settlement price reasonably high in the range, so the current price being below is a bit misleading.
Yesterday’s value area high has acted as support in the overnight session multiple times which indicates overnight participants deemed value today to be higher than yesterday.
On the Daily chart, the uptrend in NQ is a bit overextended and showing some indications of topping; combine that with weakening new business coming in, and I would not be surprised to see a pullback at some point in the coming sessions. We will need to see new business come into NQ for this trend to continue upwards.
For the next 4 years, all-day traders should be watching the news at all times while they have positions on; Trump can and will move markets with his comments, especially right now as the market is still in reactionary mode to what his administration will ultimately end up doing with tariffs and other policies.
Plan for today:
I will be patient and watch what regular session participants do off the open. Will they auction the price back down into value from yesterday or agree with overnight participants and auction the price higher? This early indication will form my trading plan for the day.
There are news events this morning, listed above, not long after the open at 9:45am & 10:00am. I will wait to take any trades until after these data releases. These could set the sentiment for the day.
If price auctions are above yesterday’s high of 22,050.50, that will be a bullish indicator for me, and I will look for long opportunities. If price auctions down into yesterday’s value area, I will continue to be patient and wait to see if the session will form into a range-based day or continue lower.
A break of price below yesterday’s value area low at 21,910.00 would indicate a bearish sentiment to me, and I will be looking for short trade opportunities.
"Volatility is not the same as risk. Volatility is your friend when it lets you buy cheaply and sell dearly." – Howard Marks