Daily Analysis - Thursday, 1/2/25
Tuesday's session resulted in the continuation of lower value. Overnight inventory is very long this morning. Dead cat bounce, or did we finally find some support?
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.
News Events this Week
It will be a light news week with the New Year’s holiday.
Thursday - 1/2/25
8:30am - US Initial Jobless Claims (Expected: 222k, Actual: 211k)
8:30am - US Continued Jobless Claims (Expected: 1.8825M, Actual: 1.844M)
9:45am - US S&P Manufacturing PMI Final (Expected: 48.3)
Friday - 1/3/25
10:00am - US ISM Manufacturing PMI (Expected: 48.2)
Prior Day Stats and Analysis - Tuesday, 12/31/24
Session Open: 21,456.00
Session High: 21,488.50
Session VAH: 21,332.75
Session POC: 21,253.25
Session VAL: 21,192.50
Session Low: 21,182.00
Session Close: 21,220.25
Session Settlement: 21,226.50
Session Range: 306.5 pts, 1226 ticks
OI Change (Prelim): +2,636 (NQ) / -4,312 (MNQ)
Prior Session Analysis
Tuesday’s session was a Normal Variation day with range extension to the downside and a new area of balance established below Monday’s session value area.
Off the open, bulls tried to auction price higher above the 21,450 area repeatedly but were rejected each time. However, at approximately 10:28am, there was an extremely violent rejection at that level by bears (highlighted in purple), almost as if they were communicating “ENOUGH!”. Looking at the chart after the fact, you can’t see this: prior rejections before this time were slower rejections; this one was very sudden and violent. If you were trading, you witnessed this. That sudden move resulted in a 135-point swing in a matter of moments and was another example of why you should ALWAYS be trading with a stop.
With that violent rejection around 10:28am, bears took control of the session and gradually auctioned price down, extending the range outside the Initial Balance before running into support around 21,220.
In my analysis on Tuesday, I wrote that if price auctioned below 21,350, 21,200 would be a key level to watch. That level held strong on Tuesday, with multiple rejections in that area by bulls to stop price from auctioning lower. I still think it is a key area to watch in the coming days; if price does auction below it, that could be a significant break, and we could see a flush downward.
Plan for Today - Thursday, 1/2/25
At the time of this writing, overnight inventory is very long and approximately 200 points above Tuesday’s settlement price of 21,226.50. If this price level holds, we will open above Tuesday’s value area but still in-balance. If price auctions above 21,488 by open we will open out-of-balance from Tuesday’s session.
Tuesday’s session volume was slightly lower than Monday’s but still in a normal range. I expected increased volume today now that the holidays are fully behind us. We saw a very modest amount of new business come into NQ on Tuesday with the addition of +2,636 contracts.
Initial and Continued Jobless claims numbers this morning came in below expectations, which I believe is either slightly bearish or a non-event for the market.
In a bullish scenario, we have a naked POC above the current price at approximately 21,500, which is also near the top of Tuesday’s session range. I will watch for resistance here, or a break above with acceptance would indicate bullish sentiment. Beyond that another level to watch is 21,570, we have a weak high there put in on Monday, 12/30. This is another area of potential resistance; a break of that area with acceptance would be very bullish, in my opinion, and could indicate a continuation of upward price movement in tomorrow’s session.
In a bearish scenario, my first level to watch would be Tuesday’s value area high around 21,330 for support. Further past that, I will still be watching the 21,200 level. Price did break down through 21,200 in the overnight session, at around 7pm last night, but was strongly rejected in the 21,140 area and resulted in this extended uptrend that has lasted throughout the overnight session. Tuesday’s session value area low and low are in all the area between 21,200 and 21,140, so this will be a key area I will be watching for either support or a break below would indicate bearish continuation.
"In trading, there is no such thing as a sure thing. It’s all probabilities." – Mark Douglas