Daily Brief - Friday, 3/7/25
Data prints came in this morning worse than expected, how much of it was already priced in? Initially, a bullish reaction to the reports but since more muted. Will price auction below 20k today?
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Upcoming News
Friday - 3/7/25
8:30am EST - US Unemployment Rate (Expected: 4%, Actual: 4.1%)
8:30am EST - US Nonfarm Payrolls (Expected: 155k, Actual: 151k)
8:30am EST - US Average Earnings YoY (Expected: 4.1%, Actual: 4%)
12:30pm EST - Fed Chairman Powell Speaks
Prior Session Stats and Analysis - Thursday, 3/6/25
Session Open: 20,310.75
Session High: 20,513.25
Session VAH: 20,325.25
Session POC: 20,137.50
Session VAL: 20,024.75
Session Low: 20,003.00
Session Close: 20,091.75
Session Settlement: 20,089.25
Session Range: 510.25 pts, 2041 ticks
OI Change (Prelim): +7,689 (NQ) / +6,057 (MNQ)
Est Volume: 762,347
Prior Session Analysis
Yesterday’s session was a Neutral Extreme day. We had a tiny bit of range extension outside of the Initial Balance to the upside and a substantial amount of range extension to the downside. We saw really good amount of new business come in to NQ yesterday with the addition of +7,689 contracts which makes 10 straight days of positive new business. The sisters moved in tandem yesterday, ES added 28k in new business as well. Volume was a little lighter in NQ yesterday than prior sessions at a little over 762k contracts traded.
Off the open we saw price chop sideways right at the prior session’s value area low before eventually auctioning up. There was no appetite for business above 20,500 and at around 11:30 we saw that sideway consolidation break to the downside and an auction down commenced for roughly the next 3 hours until 2:30pm. During the auction down price broke below the prior session’s value area low and session low. Once price was below the session low, this low served as resistance multiple times for the remainder of the session, rejecting prices from auctioning higher on 4 separate occasions by my count.
At around 2:30pm, price neared the critical 20,000 level but lost momentum, price rejected strong off this level to auction higher before running into resistance at the session low of 20,215 and rejecting. For the remainder of the session we saw a sideways consolidation with NQ closing near the bottom of the range.
My assumption is the new business that came into NQ & ES yesterday were additional short positions and most likely occurred between 12pm and the close during that roughly 200 point consolidation range. This consolidation range had quite a bit of liquidity and consolidation ranges are where large participants like to adjust inventory. Given that it is just above a key level it would make sense to adjust inventory here if you’re expecting another leg down.
There was some tariff news yesterday with the announcement that USMCA goods would be exempt from the Canada and Mexico tariffs until April 2nd. The market did not react as positively to this news as I would have expected.
Plan for Today - Friday, 3/7/25
At the time of this writing, overnight inventory is now long, over +100 points from yesterday’s close. Prior to the data releases at 8:30am, it was mostly flat and right at yesterday’s settlement price, the market has reacted positively to the prints.
One of the worst kept secrets on the street was the US Unemployment rate release today. The expectation listed was 4%, which was exactly the same as the prior release but most of the street expected it to come in higher. A 4.1% print is mostly seen as a win, I know I expected a much worse print and I suspect others did too. Nonfarm payrolls came in lower than expected, but not by a huge amount and average earnings was only 0.1% lower than expected. You have to wonder how much of this was already priced into the market. We will have to wait and see once the NY session opens whether this bullish reaction to the prints holds or if we encounter an opposite sentiment and price auctions lower. We might get a hint of this when some algos turn on at 9am. The mention of “R” word, recession, has picked up in frequency and given the graph below I don’t think this will do anything to quiet that talk.
Following this data release on unemployment, traders have adjusted expectations for the next Fed rate cut to now June, it was May as of yesterday.
With roughly 50 minutes until open, as of right now it appears we will open in-balance and in value from yesterday’s session. My plan will be to be patient once again, stay out of trades in yesterday’s value area, no trades in the middle of the range and wait for momentum based moves in either direction while paying attention to key levels since they did come into play yesterday.
Also remember it’s Friday, the saying is “never get in front of a Friday rally” but we are also in a volatile news environment and the pattern has been to selloff into the close on Fridays, as short-term traders are nervous about holding positions over the weekend.
Levels on my chart for today:
20,660 → 20,640 - I think we would have to get a substantial short squeeze today to get up here but it could be an area of resistance if price does auction up in this area.
20,500 - there was no appetite for higher prices above this area in yesterday’s session. Unless sentiment has changed today, I don’t expect for that appetite to be there today either.
20,325 - yesterday’s value area high, I would want price to auction above this area before considering long positions.
20,215 - strong area of resistance in yesterday’s session and has also come into play in the overnight session and post data releases this morning, the upward move off the news hit resistance at this area. Keep an eye on it.
20,000 - roughly yesterday’s low and a key psychological level. I expect a battle here if price auctions down to it. As mentioned earlier this week, there’s not a lot of historical price structure below this level to go off of. If we get down below it, trade price action and short term levels that develop as the session progresses.
Doesn't the market like rate cuts??!!?