Daily Brief - Thursday, 2/27/25
The market breathes a sigh of relief after NVDA's earnings didn't disappoint. PCE and potential volatility looms tomorrow. Will bullish overnight price action continue after open?
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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.
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Thursday - 2/27/25
8:30am EST - US Initial Jobless Claims (Expected: 222k, Actual: 241k)
8:30am EST - US GDP QoQ 2nd Estimate (Expected: 2.3%, Actual: 2.3%)
8:30am EST - US Durable Goods (Expected: 2%, Actual: 3.1%)
Friday - 2/28/25
8:30am EST - US PCE Price Index YoY (Expected: 2.5%)
8:30am EST - US PCE Price Index MoM (Expected: 0.3%)
8:30am EST - US Core PCE Price Index YoY (Expected: 2.6%)
8:30am EST - US Core PCE Price Index MoM (Expected: 0.3%)
8:30am EST - US Consumer Spending MoM (Expected: 0.2%)
Prior Session Stats and Analysis - Wednesday, 2/26/25
Session Open: 21,238.75
Session High: 21,409.25
Session VAH: 21,400.75
Session POC: 21,344.00
Session VAL: 21,174.00
Session Low: 21,064.50
Session Close: 21,191.25
Session Settlement: 21,187.00
Session Range: 344.75 pts, 1379 ticks
OI Change (Prelim): +4,577 (NQ) / +3,413 (MNQ)
Est Volume: 643,410
Prior Session Analysis
Yesterday’s session was a Neutral day with range extension on both sides of the Initial Balance. NQ once again added new business yesterday with the addition of +4,577 contracts which brings it’s 10-day total to approximately +48,000 contracts added. The total OI for NQ currently stands at almost 291k, so NQ has added roughly 16.5% of that OI in the last 10 days. Volume was fairly high yesterday once again at 643,410 contracts traded.
We did not see the pattern emerge of a selloff off the open yesterday that we had seen in the prior sessions, instead we had an auction up off the open. You can see on the chart however that Tuesday’s session high acted as strong resistance to price auction higher. Price action flattened out right at that level, buyers capitulated and sellers took control. This indicated sentiment among participants that NQ’s fair value was not higher than Tuesday’s session. This was a great place for a cheap short if you were watching it, it also once again indicates that these prior session levels are important to have on your charts.
During the auction down in price between 12:30pm and 2:15pm there was a period of consolidation right below Tuesday’s value area high which was a good entry point for a with-trend trade if you weren’t in already. Tuesday’s value area low provided support and essentially stopped the auction down. It was tested twice by sellers before indicating no business was to be done below and buyers auctioned price back up into the close to finish almost in the middle of the range.
The open and close difference was only 47 points, so essentially a sideways day, not unexpected going into NVDA earnings after the bell. The range and price action yesterday however was very clean, it provided opportunities for both range trading and momentum trading if you were patient enough to wait for the opportunities to emerge.
Plan for Today - Thursday, 2/27/25
At the time of this writing overnight inventory is long, approx 160 points above yesterday’s close. Price action overnight has been bullish.
Data releases this morning saw GDP come in in-line with expectations, Jobless claims and Durable goods came in higher than expected. The immediate reaction to this data has been muted.
NVDA did not disappoint with earnings after the bell last night however they also were not seen by the street as a blowout. They were good but not great and the reflection in NVDA’s stock price has been muted. Given that NVDA is priced for perfection, not seeing a selloff is in my opinion a win for the market and brings some stability. I would like to say the storm clouds are now clear with NVDA earnings behind us but we have PCE tomorrow which is the Fed’s preferred inflation gauge. I expect that data release to potentially bring a lot of volatility before open tomorrow.
Overnight price is currently in-balance from yesterday’s session. If it stays this way my plan for today is to be patient and wait for good trade locations to develop. I want to see how participants in the NY session react now that any fear of a shock from NVDA’s earnings is behind us but also knowing PCE is looming tomorrow.
Trump was not specific or clear yesterday in his discussion around tariffs for Canada and Mexico that are supposed to go into effect on March 1. He also was not clear on EU tariffs. This has left the market in a state of confusion in regard to what impact these tariffs may have. The market hates uncertainty, I believe this is the biggest risk to the market today as more information is released around these tariffs and their potential impacts on the economy. Keep an eye on the news whenever you have positions on, the situation can change very quickly based on any breaking news. If you need a good news source, financialjuice.com is a great site to keep up next to your trading screen.
Levels I will be watching today:
21,650 - strong level of resistance in Monday’s session
21,410 - yesterday’s high and another strong level of resistance in yesterday’s session and Tuesday’s session. A break above would indicate sentiment for fair value today is higher than yesterday. If price breaks this level I would expect a strong drive higher to find a premium zone.
21,174 - yesterday’s value area low, any break below this would indicate sentiment has changed for fair value to be lower than yesterday and I would expect price to test yesterday’s low if this is broken.
21,050 - area slightly below yesterday’s low, this was a bigger area of support in Tuesday’s session which saw a lot of consolidation in this area. A break below this and I would expect a drive lower by participants to identify the discount area.
21,000 - a key psychological level and the market dipped its toe below this to test it on Tuesday. If price auctions lower, participants may test this area again to see if there is any business to be done below it.