Quiet September could mean expansion in October for the NASDAQ 100 futures, as bulls continue to defend the key 4000 level.
4000 Defended by Bulls
A month ago I wrote a piece called “NQ Reaches 4071 Target”, in which I wrote, “While the NQ could see near-term selling pressure over the next few days, buyers will be looking to defend key levels for a shot at new highs into the 100% expansion target at 4151.25. Any pullback into 3991.50 to 4000 is likely to be defended by OTF responsive buyers looking to defend prior resistance for a shot at 4151.”
Here’s the chart that accompanied that article:
As you can see, after reaching our upside target at 4071 in the NQ, price did indeed sell off into our key level at 4000, and on two separate occasions. As anticipated, bulls came in to defend this key LVN in the composite profile, with the first bounce going for over 110 points in just four sessions.
The current test of the 4000 level has held for three straight sessions, and is the current pivot that major players are focusing on. If buyers can continue to hold price above 4000, we could see serious expansion in October that sees price to 4200.
Quiet September Implies Expansion in October
After an aggressive August, in which the NQ rallied 260 points from the August lows to the end of the month, it was expected that we could see some digestion in September. However, the range is far tighter than one could’ve expected, as the NQ has a range of just 120 points in September when it’s been averaging over 200 points per month on a 10-month average basis. That is, the NQ has only traded 56% of average monthly range, with just one more session left in the month.
What does this mean? It means price found balance in September, and is likely ready for imbalance (expansion) in October. Watch the boundaries of the range (4000 to 4120) for significant expansion ahead, as the NQ is likely to see a range that is either equal to, or surpasses, its average monthly range in the upcoming month.
The Game Plan
Bulls will be looking to continue to defend the 4000 LVN for a shot at new highs into 4223 in October, with scaling points at 4143 and 4183. They’ve got to take CVPOC bid through 4058 first, however.
Bears will be looking to keep CVPOC offered at 4058 for a shot at running the downside sell stops through 4000, which have begun to build after recent tests the last three sessions. Failure to hold the LVN between 3983.75 and 4000 would be significant, and could spark a swift move into the next HVN below at 3878.25.
Cheers!
Frank Ochoa