Daily Brief - Wednesday, 7/23/25
Yesterday's High-Volume Selloff Shook Things Up, But 23,100 Support Held Firm
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 Docket
A fairly quiet and calm week ahead on the data release front as the market preps for FOMC next week on 7/30. Two of the Mag7 announce earnings this week with Google and Tesla on tap which will require watching as they can move the NQ.
Wednesday - 7/23/25
10:00am EST - Us Existing Home Sales (Expected: 4M)
4:00pm EST - Google Q2 2025 Earnings (Call @ 4:30pm EST)
4:05pm EST - Tesla Q2 2025 Earnings (Call @ 5:30pm EST)
4:10pm EST - IBM Q2 2025 Earnings (Call @ 5:00pm EST)
Thursday - 7/24/25
9:45am EST - US S&P Services PMI Flash (Expected: 52.9)
9:45am EST - US S&P Manufacturing PMI Flash (Expected: 52.4)
9:45am EST - US S&P Composite PMI Flash (Expected: —)
10:00am EST - US New Homes Sales (Expected: 0.65M)
4:00pm EST - Intel Q2 2025 Earnings (Call @ 5:00pm EST)
Friday - 7/25/25
8:30am EST - US Durable Goods (Expected: -10%)
Prior Session Analysis - Tuesday, 7/22/25
Session Stats
Open: 23,346.00
High: 23,349.75
Low: 23,108.00
Close: 23,221.25
Settlement: 23,226.25
Range: 241.75 points / 967 ticks
Volume: 538,310
Open Interest Change: -6,474 (NQU5)
Value Area (Market Profile)
Value Area High (VAH): 23,250.00
Point of Control (POC): 23,225.00
Value Area Low (VAL): 23,170.00
Prior Session Breakdown - Market Profile and NY Session
Tuesday's session delivered a wake-up call for anyone getting too comfortable with the recent bullish momentum. What started as a relatively calm opening at 23,346 quickly turned into a volatile affair, with price plunging nearly 250 points to 23,108 within the first 30 minutes. This sharp selloff created a massive initial balance of 241.75 points—and when you get an IB that wide, it's pretty typical for price to stay trapped inside it for the rest of the session.
The session developed into a normal day with a "D"-shaped profile, but with some interesting characteristics. There was clear excess at the top in the form of a single-print selling tail, while the bottom showed just a single TPO from the B period without true excess. This suggests the market was more comfortable rejecting higher prices than it was finding a definitive floor.
What made this session particularly noteworthy was how Monday's session low at 23,255 suddenly became a brick wall. Price tried multiple times during the K, L, and M periods to break back above this level, but the rejections were consistent, but not violent. This typically indicates a “soft” or weaker level. This rejections was the market’s way of saying "nope, fair value is definitely lower today." However—and this is crucial—even with all that selling pressure, price managed to hold above the critical 23,100 level, keeping us out of the previous higher timeframe range NQ broke out of on Monday.
The value area shifted lower but remained elevated compared to pre-breakout levels. The VAH dropped to 23,250, POC settled at 23,225, and VAL landed at 23,170. The POC's position near the middle of the value area confirms this was a balanced session once the initial volatility settled down.
The fact that the VAL held at 23,170—well above the 23,100 breakout level—is actually encouraging. It shows that even during a correction day, the market isn't ready to completely abandon the higher fair value established earlier this week.
Volume & Participation
Total Volume: 538,310 – highest since last Wednesday (July 16th) and the 4th highest volume day since June 20th
Open Interest: -6,474 contracts (NQU5) – fairly significant outflow indicating institutional long liquidation
Price Range: 241.75 points / 967 ticks – increased range driven by the opening selloff
The combination of high volume and substantial open interest decrease tells a pretty clear story: some other timeframe participants were hitting the exits. The sharp auction down came with serious volume behind it, which usually means the big players were making moves, not just retail panic selling.
Final Thoughts
Tuesday's session was a reminder that even strong uptrends don't go straight up. The institutional long liquidation was notable, but what's encouraging is that the selling found its limit at 23,108—just above the crucial 23,100 level. This suggests there's still underlying support for the recent breakout structure.
The late-day weakness into the close, starting right at 3:50 PM, wasn't great for bullish sentiment, but the bigger picture remains intact. Sometimes the market just needs to shake out some weaker hands and reset positioning before continuing higher.
Today’s Analysis – Wednesday, 7/23/25
Market Context
NQ is looking a bit more stable this morning, currently trading at 23,260, about 34 points above yesterday's settlement. The overnight range between 23,284 and 23,170 (which happens to match yesterday's VAL exactly) suggests we're in a more balanced state after yesterday's volatility. The fact that the overnight low held right at yesterday's value area low is actually a positive sign.
We're dealing with a normal volatility environment now, and the gamma positioning appears to have settled back into positive territory, which should support any meaningful dips. Dealer behavior seems to be back to buying weakness, though headline sensitivity remains elevated with several major catalysts on the horizon.
The market is still working through what yesterday's institutional selling means for the bigger picture. Was it just profit-taking and position adjustment, or the start of something more serious? The overnight action suggests participants aren't panicking, but they're definitely being more cautious.
Bias & Mindset
Bias: Neutral
I'm staying neutral here with medium confidence because we've got some conflicting signals to work through. On the bearish side, yesterday's high-volume long liquidation and the consistent resistance and rejection at Monday’s lows suggest some institutional players are getting defensive. That's not something to ignore.
But here's the thing—the higher timeframe trend is still pointing up, and more importantly, we held above 23,100 even during yesterday's worst selling. That level has become the line in the sand for this whole move. As long as we're above it, this could just be a normal pullback in what's still a bullish trend.
The quote "bull markets are built on a wall of worry" feels pretty relevant right now. We've got FOMC next week, tariff headlines floating around, and the whole Powell situation creating uncertainty. But sometimes the best moves happen when everyone's nervous.
Key Levels I’m Watching Today
Upside:
23,350.00 — Yesterday's high, would need to reclaim this to show real strength
23,284.00 — Overnight high, first test of buying interest
23,250.00 — Yesterday's VAH, break above could signal recovery mode
Downside:
23,255.00 — This was resistance yesterday, might flip to support today
23,170.00 — Overnight low and yesterday's VAL, key level to hold
23,108.00 — Yesterday's low and the big support level keeping us out of the old range
Final Thoughts on Today
Today should give us some clarity about what yesterday's selling really meant. I'll be watching the opening auction closely—if we see strong conviction and buyers stepping up right away, that would lean me bullish for the session. But if there's a lack of conviction or weak follow-through, that might suggest yesterday's weakness has more legs.
Alphabet and Tesla report after the bell today, which could definitely move the needle for the NASDAQ. Plus, any fresh news on tariffs or the Powell situation could shake things up quickly.
The key thing to remember is that we're still above the major support at 23,100, and the overnight action hasn't been panicky. Sometimes markets just need to digest big moves, and that might be all we're seeing here. But staying alert and reading the price action as it develops will be crucial in this environment.
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