Daily Analysis - Monday, 12/23/24
We saw short covering on Friday in the NQ. With a huge news week behind us and the holidays in front of us, will we see new business enter to continue the uptrend?
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
Christmas Eve, 12/24/24 - NQ Market closes @ 1:15pm EST
Christmas Day, 12/25/24
NQ Market closed for 12/25/24 trading session.
NQ Market opens at 6pm EST on 12/25/24 for the 12/26/24 trading session.
New Year’s Eve, 12/31/24 - NQ Market closes @ 5pm EST
New Year’s Day, 1/1/25
NQ Market closed for 1/1/24 trading session.
NQ Market opens at 6pm EST on 1/1/24 for the 1/2/24 trading session.
Upcoming Events
Light news week this week, with the Fed resistant to further rate cuts, we are back in the “bad news is good news” cycle. Keep an eye on the Jobless claims numbers on Thursday, if they come in hotter than expected we could see a bullish reaction by the market.
Today - Monday, 12/23/24
10am - US CB Consumer Confidence (Expected: 113.5)
Tuesday, 12/24/24
8:30am - US Durable Goods (Expected: -0.3%)
8:30am - US Core Durable Goods (Expected: 0.3%)
10am - US New Home Sales - Units (Expected: 0.67M)
Thursday, 12/26/24
8:30am - US Initial Jobless Claims (Expected: 225k)
8:30am - US Continued Jobless Claims (Expected: 1.881M)
Higher Timeframe Charts
Looking at the market from the top down, we see we are still in a good uptrend structure on both the Weekly and Daily charts. The market did flirt with danger last week, auctioning down and testing the 21,000 area. I believe that was a key level that, if the market had not rebounded off of, it could have tipped over into a period of consolidation or bearish trend. We recovered nicely on Friday, but I was looking for the bounce on Thursday a day too quickly. Friday’s recovery had the hallmarks of short covering, and the change in open interest from Friday supports that thesis. A very small amount of new business came into the market on Friday. When you see a large bounce at the end of a downtrend without a large increase in OI, that indicates short covering, which results in those shorts closing positions. For the recovery to continue, we will need to see new business entering the market, opening positions, and thus increasing OI.
Prior Day Stats and Analysis - Thursday, 12/19/24
Session Open: 21,210.50
Session High: 21,812.25
Session VAH: 21,802.50
Session POC: 21,664.50
Session VAL: 21,526.50
Session Low: 21,160.50
Session Close: 21,567.50
Session Settlement: 21,566.50
Session Range: 651.75 pts, 2607 ticks
OI Change (Prelim): +1,522 (NQ) / -258 (MNQ)
Market Profile Analysis
Friday’s session was a Trend day with buyers in control off the open until after 12pm. We then had pretty good trade facilitation at the upper end of the range, with price spending most of the time in the session between 21,800 and 21,550.
Two key levels to watch from Friday are the 21,800 area where price was rejected from moving higher and 21,550 which acted as support later in the session.
As mentioned above, Friday’s session showed the hallmarks of short covering. We saw a substantial move in price auctioning upwards off the open but a very modest increase in new business.
Last week was a huge week in news and events, FOMC, contract rollover on Friday, and Triple Witching, which affects the entire market. Those things are all behind us now, and it is a light news week this week, along with the holidays.
For the uptrend to continue, we will need to see new business come into this market, however, I do not know if we will see indications of that until after the holidays. It is tough to predict how much activity we will see in the market between now and January 2nd.
I expect low volume this week in the market, it is a riskier time to trade around holidays as banks are closed and volatility may be increased with the lower volume. Be very careful if you decide to trade between Christmas Eve and New Year’s Day.
Thesis for Today - Friday, 12/20/24
As of the time of this writing, overnight inventory was long until 8:30am and is now flat, right at Friday’s settlement price.
The overnight high is 21,741.75, and the overnight low is 21,544.25.
It appears at this time that we will open in balance with Friday’s value area.
Anything could happen today: we could see new business enter the market and auction price higher, we could see price auction lower and test the area of the start of Friday’s uptrend (21,160), and we could also see choppy, range-bound price action heading in the holiday. Right now is a great time for traders to only look for their A+ setups and not get too aggressive or greedy.
My trading plan today, given that we are set to open in balance and with the Christmas holiday in the next two days, is to be very patient, look for good trade locations to develop today, and also be ok not taking trades if I don’t see a setup with any determined edge.
"The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading." – Victor Sperandeo