Resistance Zones and Delta Insights
U.S. markets are closed for the Labour Day holiday, leading to light liquidity and muted volatility in NASDAQ futures. Despite this, the order flow offers useful insights for those anticipating tomorrow’s open and short-term traders seeking opportunities.
NASDAQ futures tested the resistance zone of 23,488–23,500, with a brief hover above the VWAP at 23,471. The 08:00 ET futures bar showed a bearish turn with a delta of -170 and a cumulative delta dropping to -972, suggesting a strong rejection at the Value Area High (VAH) and VWAP.
Key resistance levels to monitor include 23,470 (VWAP) and 23,485 (below VAH). Downside targets are set at 23,403 (just above today’s Point of Control), 23,372 (near today’s Value Area Low), and 23,420, which aligns with Friday’s VA Low at 23,417.
For risk management and profit-taking, the tradeCompass framework advises locking partial profits as soon as the first target is hit. Secure larger profits at the second target while using stops at the entry point. On low-volume days, as observed today, early scaling out is recommended.
Today’s price action suggests rejection at resistance. The bearish bias is supported by failed breakout attempts and negative delta, but confidence is moderate due to thin holiday trading conditions.
Bearish Bias and Market Insight
Things are looking more bearish than bullish as we head into the U.S. market open. During the quiet Labor Day session, we saw Nasdaq futures fail to hold above key resistance around the 23,488 to 23,500 zone. This rejection suggests sellers are gaining control, setting a cautious tone for the week.
This technical weakness is happening as the market digests the latest PCE data from late August, which showed inflation ticking up slightly to 2.9%. That small increase has renewed concerns about the Federal Reserve’s next move, making investors hesitant to push prices higher. We’re also seeing some chatter about major chip manufacturers warning of a potential slowdown in AI hardware demand for the fourth quarter.
For traders using options, this could be a signal to consider buying near-term put options on the QQQ. A failure to reclaim the 23,470 level on Tuesday could open the door for a slide toward our first target of 23,403. This strategy allows for defined risk while positioning for a potential downturn.
Those of us trading futures should watch the 23,470 to 23,485 area as a prime zone for initiating short positions. Given the setup, it would be wise to take partial profits at the 23,403 level and move stops to the entry point. This disciplined approach helps manage risk if the market suddenly reverses when full volume returns.
We must remember that September can be a tricky month, similar to the market chop we saw back in September 2023 when the Fed was strongly signaling its “higher for longer” rate policy. The low volume on a holiday can sometimes give false signals. Tuesday’s open will be the real test of whether this bearish pressure has legs.
Adding to the cautious outlook, the most recent weekly jobless claims report came in at 235,000, continuing a slow but steady upward trend over the past two months. This gradual softening in the labor market gives bears more reason to believe the economy could be losing momentum. The key is to see if this sentiment carries over when the big players return to their desks.
