Daily Analysis - Friday, 1/31/25
NQ has closed much of the gap caused by Monday's selloff. With most of the weekly headwinds behind us, will it close the gap completely today?
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 - 1/31/25
8:30am EST - US PCE Price Index YoY (Expected: 2.5%, Actual: 2.6%)
8:30am EST - US PCE Price Index MoM (Expected: 0.3%, Actual: 0.3%)
8:30am EST - US Core PCE Price Index YoY (Expected: 2.8%, Actual: 2.8%)
8:30am EST - US Core PCE Price Index MoM (Expected: 0.2%, Actual: 0.2%)
8:30am EST - US Consumer Spending MoM (Expected: 0.5%, Actual: 0.7%)
9:45am EST - US Chicago PMI (Expected: 40)
Prior Session Stats and Analysis - Thursday, 1/30/25
Session Open: 21,650.00
Session High: 21,748.75
Session VAH: 21,647.75
Session POC: 21,551.00
Session VAL: 21,507.25
Session Low: 21,419.50
Session Close: 21,623.00
Session Settlement: 21,624.75
Session Range: 329.25 pts, 1317 ticks
OI Change (Prelim): +1,706 (NQ) / +1,345 (MNQ)
Prior Session Analysis
Yesterday’s session was a Normal Variation day with range extension to the downside.
Yesterday’s session opened with a small gap to the upside. Off the open, there was an initial attempt to auction price higher in the direction of the gap, reaching slightly above 21,748 before sellers entered, auctioning price back down to close the gap and creating a single-print selling tail at the top of the range. The initial drive up off the open set the high extreme for the session.
Wednesday’s value area low provided support during the auction down, buyers stepped in right at that level, indicating that participants were rejecting fair value being lower than the prior session. This probe lower to test for business is a common thing for the market to do. Once it was clear there was no more business to do below the value area from the session before, price auctioned upwards towards the top of the range for the remainder of the session before a sharp selloff into the close that was also bought heavily.
NQ saw a moderate amount of new business enter yesterday with a net gain of 1,706 contracts.
Plan for Today - Friday, 1/31/25
At the time of writing this PCE data has come out in line with expectation, YoY was slightly higher. Consumer spending was also higher than expected. There has not been a negative reaction to the market by this news, matter of fact it seems to have had no reaction at all.
NQ is out of balance with a gap to the upside, currently around 50 points above yesterday’s range.
If we open out of balance with an upside gap, opening range breakout trade in the direction of the gap will be the first trade opportunity I will be looking for. With all of the weekly headwinds gone now, besides the Chicago PMI at 9:45am, NQ could be in the clear today to try and close the gap created by Monday’s DeepSeek sell-off. For this reason, my bias is bullish today. One of our sayings here is never to get in the way of a Friday rally.
To the downside, very similar to yesterday I will be looking at key levels such as yesterday’s high, value area high and value area low for potential support in the event that price auctions down.
To the upside there aren’t any signs of potential resistance until the area of 21,850. Another level above that would be 21,920. At that level, NQ would take out Monday’s news pivot and erase all of the losses from the news event, making it a non-issue.
Be patient today, control what you can control, and wait for your setup. Have a great trading day!
"Day trading is like fishing: You wait patiently for the perfect opportunity, and when it comes, you act decisively." – Unknown