Daily Analysis - Wednesday, 1/8/25
Over the last seven sessions, NQ has formed a range-bound market of roughly 900 points as it awaits new information. Will we head further down today and retest the bottom of the range?
Note to Readers
The market is closed tomorrow at 9:30am EST in observation of Jimmy Carter’s funeral. I will not be providing a daily analysis tomorrow, 1/9/25. I will pick back up on Friday, 1/10/25 with a prior day analysis of today’s market session.
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
Today - Wednesday - 1/8/25
8:15am EST - US ADP Employment Change (Expected: 130k)
8:30am EST - US Initial Jobless Claims (Expected: 221k)
8:30am EST - US Continued Jobless Claims (Expected: 1.89M)
2:00pm EST - FOMC Meeting Minutes
Thursday - 1/9/25
NQ Market will close at 9:30am EST in observance of National Day of Mourning for President Jimmy Carter’s funeral.
Market will reopen for Friday’s trading session at 6pm EST.
Friday - 1/10/25
8:30am EST - US Unemployment Rate (Expected: 4.2%)
8:30am EST - US Nonfarm Payrolls (Expected: 153k)
8:30am EST - US Average Earnings YoY (Expected: 4%)
10:00am EST - University of Michigan Sentiment Prelim (Expected: -)
Prior Session Stats and Analysis - Tuesday, 1/7/24
Session Open: 21,791.75
Session High: 21,806.00
Session VAH: 21,560.00
Session POC: 21,456.75
Session VAL: 21,367.25
Session Low: 21,279.50
Session Close: 21,359.00
Session Settlement: 21,359.75
Session Range: 526.5 pts, 2106 ticks
OI Change (Prelim): -2,203 (NQ) / +5,169 (MNQ)
Prior Session Analysis
Yesterday’s session was a Normal Variation day. Sellers were in control for most of the session, with some pullbacks to the mean before continued selling. Buyers did step in decisively to reject lower prices at the end of the session below 21,320.
The 21,500 level, which I’ve mentioned before was a key level for me, did provide some support during the late morning but ultimately broke, it then acted as resistance on a retest before price auctioned lower.
The lack of continuation to the upside yesterday, along with another day of business leaving the NQ market, further confirms my belief that the prior two positive sessions were caused by short covering.
OI has decreased each of the last 3 NQ sessions to a total of approximately -10,682 contracts.
On the higher timeframe chart, NQ has formed a range bound market over the last 7 sessions, that range extends from 21,900 down to 21,000.
My analysis leads me to believe we are seeing a market attempting to balance, if it hasn’t already done so, as it waits on new information. That new information is: what the Fed will decide concerning future rate cuts and how the economic policies, such as tariffs, from the Trump administration will ultimately affect inflation. So we are currently in the situation where we have the Fed watching and waiting to react to future inflation data based on how the new administration’s decisions affect that data, and the market watching and reacting to both.
Trump’s participation in social media will be a consistent producer of market volatility and can happen at any time, especially during this period of uncertainty. Right now, traders should always be watching, or listenting to, a live news wire while trading.
Plan for Today - Wednesday, 1/8/25
Overnight inventory is currently slightly short, -53 points below yesterday’s settlement. It was flat but above yesterday’s settlement until about 6:30am this morning when it broke down below settlement; it attempted to break back above but found the settlement to be resistance and auctioned lower, ultimately finding support around 21,250. We are currently very close to the bottom of yesterday’s range; while we are still in-balance from yesterday, we may continue lower by open and open with a gap down and out-of-balance from yesterday’s session.
Jobs data released this morning at 8:15am & 8:30am could provide volatility in either direction. I plan to be flat before each of these news releases. The FOMC minutes will also be released today at 2pm, that will also cause volatility. I plan to be flat before that news release as well.
I have a bearish bias today. Given the range that has developed, I think it is very possible that we could auction lower today and retest the bottom of the range between 21,045 and 21,000. Despite my bias, I will still have a bullish and bearish trading plan.
Trading Plan for today:
Bullish: Price would need to auction up, break and accept above yesterday’s value area low at 21,367.25. Beyond that, the next levels to watch would be:
21,445: area approximately at the overnight high
21,500: area that has been both resistance and support at times during the last 7 sessions.
21,560: yesterday’s value area high
Bearish: If we gap down and open out-of-balance, I will follow gap rules. If we do not, I will look for price to auction down, break and accept below yesterday’s low at 21,279.50. Beyond that, the next levels I will be watching for further continuation or rejection will be:
21,220 - 21,200: area of support on Jan 3rd.
21,140: area of support on Jan 2nd and Jan 3rd.
21,040 - 21,000: psychological level and an area of strong buying pressure on Jan 2nd.
"Trading doesn’t just reveal your character; it also builds it if you stay in the game long enough." – Yvan Byeajee