Daily Analysis - Thursday, 1/23/25
Another push up in price yesterday for NQ allowed it to put in a higher high but without new business. Overnight inventory today is short, is this a healthy pullback or another leg down in the range?
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
It will be a light news week, with Friday bringing the bulk of the data releases. Since they are during regular trading hours, be sure to be aware of them, and it’s always recommended to be flat before they are released.
Today - Thursday - 1/23/25
8:30am EST - US Initial Jobless Claims (Expected: 220k, Actual: 223k)
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 - Wednesday, 1/22/25
Session Open: 21,913.75
Session High: 22,093.50
Session VAH: 22,060.00
Session POC: 22,009.75
Session VAL: 22,000.00
Session Low: 21,902.50
Session Close: 21,997.75
Session Settlement: 22,000.50
Session Range: 191 pts, 764 ticks
OI Change (Prelim): -409 (NQ) / +5,330 (MNQ)
Prior Session Analysis
Yesterday was a Normal Variation day with range extension to the upside.
There was a large move, +300 points, in the overnight session which resulted in yesterday’s session opening with a significant gap to the upside.
Unlike the prior two sessions, which also opened with upside gaps, yesterday’s session did not correct and close the gap. Instead, price auctioned upward with strength off the open.
Yesterday’s range was small, less than 200 points, and the most significant move was during the overnight session. The overnight session rarely has a larger range than the NY session, but it does happen from time to time.
There is now a gap in structure below starting at 21,902.50 down to 21,783.50. The market likes to test gaps, this will be an area of potential support if price auctions down to it in the coming sessions.
Another level to call out is where price rejected yesterday at the high’s near 22,100. This is also a level price rejected at back on Dec 26th. Mark this area on your chart for future sessions; if the price can auction above it and hold, it would be a bullish indicator.
Plan for Today - Thursday, 1/23/25
At the time of this writing overnight inventory is fairly short, -100 points from yesterday’s close. It is currently testing the top area of the gap mentioned above and trading sideways.
Price is right on the edge of yesterday’s low, we could open in-balance near the extremes or slightly out-of-balance.
Initial Jobless Claims came in slightly hot this morning but we did not see a reaction from the market in either direction, I would say it appears to be a non-issue for participants today but we will wait to see what happens when the NY session opens at 9:30am for confirmation.
With 4 out of the last 5 days in NQ being green, the uptrend has become a bit extended, this could be a healthy pullback to the mean before heading higher.
Given that this appears to be a pullback from the trend being extended, I will look for an opening range breakout to the downside today off the open.
One piece of data, as I mentioned yesterday, that is counter to the trend heading higher is we are not seeing new business coming into the market as the trend has auctioned higher. Trends need new business to continue in either direction. The shape of a range-bound, sideways market is forming.
Today, I will be watching the following levels:
22,093.50 - yesterday’s high, a break above would be bullish, a rejection below here could indicate a range-bound day. A break above this would also take out the pivot point from the Dec 26th rejection a clear a path for price to auction higher.
21,902.59 - yesterday's low, a break below would be bearish, a rejection above here could also indicate a range-bound day.
21,770 - I have this level marked on my chart as potential support, as it was an area of resistance on Jan 21st & 20th.
21,550 - another area of potential support from Jan 21st, 20th, 19th, and 17th. It was an area of resistance on Jan 16th.
"The more you let emotions guide your trading, the more money you’ll lose." – Unknown