Daily Analysis - Tuesday, 12/17/24

Bulls were firmly in control yesterday for the entire session. Will it continue today, or will we have a day of rest and consolidation?

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.

Note

Due to contract rollover, yesterday we a huge increase in the volume of the back month contract (Mar 2025, NQH25) which eclipsed the volume in the front month contract (Dec 2024, NQZ24). If you are confused why prices seem to have gone up quite a bit, that is because when rollover happens, prices change to reflect the increased time and volatility in the back month contract. From this point forward, any prices mentioned on here will reflect the March 2025 (NQH25) contract and no longer be representative of the Dec 2024 (NQZ24). If you are not already trading in the back month contract and are not on a broker who adjusts this for you automatically, once this tipover in volume happens it is recommended that you should be trading the back month contract from this point forward.

Upcoming Events

• This week will be dominated by news. The FOMC rate decision and press conference on Wednesday, 12/18, will loom over the market early in the week. On Friday, 12/20, we have the PCE reports release and the rare Triple Witching event. Both could cause unusual market behavior and volatility once we get past the FOMC event. Traders should be on guard this week when holding positions.

Today - Tuesday, 12/17/24

• 8:30am US Retail Sales MoM (Expected: 0.5%)

• 9:15am US Industrial Production MoM (Expected: 0.3%)

Wednesday, 12/18/24

• 8:30am US Housing Starts Number (Expected: 1.343M)

• 2:00pm FOMC Rate Statement

• 2:00pm US Interest Rate Decision (Expected: 4.5%, 25bps rate cut)

• 2:00pm FOMC Summary of Economic Projections

• 2:30pm FOMC Press Conference w/ Powell

Thursday, 12/19/24

• 8:30am US Initial Jobless Claims (Expected: 229k)

• 8:30am US GDP QoQ Final (Expected: 2.8%)

• 10:00am US Existing Home Sales (Expected: 4.08M)

Friday, 12/20/24

• 8:30am US PCE Price Index YoY (Expected: 2.5%)

• 8:30am US PCE Price Index MoM (Expected: 0.2%)

• 8:30am US Core PCE Price Index YoY (Expected: 2.9%)

• 8:30am US Core PCE Price Index MoM (Expected: 0.5%)

• 10:00am University of Michigan Sentiment Final (Expected: 74)

• Triple Witching

  • Triple witching happens 4 times a year; it is when Futures, Index Options, and Stock Options derivatives contracts all expire on the same day.

Prior Day Stats and Analysis - Monday, 12/16/24

Session Open: 22,194.25
Session High: 22,450.00
Session VAH: 22,455.25
Session POC: 22,420.50
Session VAL: 22,320.50
Session Low: 22,191.75
Session Close: 22,409.25
Session Settlement: 22,408.00
Session Range: 258.25 pts, 1033 ticks
OI Change (Prelim): +24,245 (NQ) / +9,191 (MNQ)

Market Profile Analysis - Monday, 12/16/24

• Yesterday’s profile was a Trend day. Buyers stepped in right off the open and were in control for the entire day up until the last 10 minutes of the session.

• Trade was mostly one-sided in the morning as price auctioned up to the top of the range where more two-sided trade was facilitated later in the session. This shows an acceptance by both sides of higher prices in yesterday’s session.

Price Action Analysis - Monday, 12/16/24

• I didn’t label yesterday’s price action chart because it mostly speaks for itself. Buyers were in control pretty much the entire session until late, after 3pm where price flattened out and sold off a bit into close.

• It is rare in NQ to see one-side, in this case buyers, this much in control for essentially the entire session. There were a couple brief pullbacks where sellers tested appetite for lower prices but were firmly rejected and price continued auctioning higher.

• One downside of a strong trend day like this, at the same time NQ is at all-time highs, is, as traders it leaves us blind to potential levels of support below the current price.

Trading Plan for Today - Tuesday, 12/17/24

• At the time of this writing overnight inventory is slightly short below yesterday’s settlement, right in the middle of yesterday’s value area. We are set to open in-balance today if price remains steady. The US Retail Sales and US Industrial Production reports this morning may cause some volatility before open and could potentially move us out of balance if they come in far enough off expectations.

• Yesterday’s session closely resembled Wed, 12/11. We typically see a consolidation day following a strong Trend day, I will expect sideways price action or a pullback today. NQ is also a bit overextended on the higher timeframe charts. Another factor supporting the thesis for a consolidation day is FOMC is tomorrow.

• Contract rollover activity will continue today, that is an unknown variable for volatility, anything could happen.

• My bias today is Neutral. I plan to be patient and wait for good trade locations to reveal themselves as the session develops this morning.

• Levels for today:

  • 22,172 - 22,157: area of strong resistance from Friday’s session which became support off the open in yesterday’s session.

  • 22,117 - 22,112: Friday’s value area high and an area of repeated resistance in Friday’s session and on Wed, 12/11. Price has moved above this level, I would watch it for potential support on any move down.

Word of advice - We are in a contract rollover period in the NQ. Contract rollover periods are usually defined by volatility and whipsaw price behavior. Traders must be patient, protect capital, and follow the “see money, take money” mantra if they choose to trade during this period. Many traders completely exit the market and avoid trading during contract rollover periods. That is not a bad thing. I would encourage all traders to take a break during this time period if they find the price action frustrating and/or lacking a fit to their trading strategy.