Monday, March 01, 2010

Morning Briefing for March 1st: Inside the Overnight Range

10:39 AM CT - I've added the top Market Delta chart to show how we've largely sustained price above VWAP on strong NYSE TICK and positive Cumulative Delta. Note the outperformance of NASDAQ and Russell 2000 stocks, suggesting favorable risk appetite. As long as we see a positive Cumulative TICK, the path of least resistance is to the upside.

After a strong showing earlier in the overnight session, stocks have fallen below their volume-weighted average price (red line), failing to take out resistance in the 1110-1112 area of the ES futures. At the same time, we've seen risk assets pull back in pre-opening trade: commodities, euro, and Aussie dollar.

Note that we're building volume around the 1106/1107 area; how we treat that price level will say a great deal about the day's trade. Inability to sustain price above VWAP and that resistance level would pose a problem for the bulls and would have me looking to the downside. At this juncture, we're trading within the overnight range and I'll be looking closely at tests of range extremes for clues as to the day's direction.

I'll be updating the market this morning via Twitter and the blog.