Market Profile Analysis of S&P Futures – 05.25.18

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

Futures are off double digits currently and again we are trading back in the center of the larger range. Obviously we are also slated to open right in the middle of yesterday’s range. Futures are actually trading very close to halfback right now. In the bigger picture, the market is still balancing and we know nothing as of yet pertaining to what the next move will be.

Overnight inventory is net long but not nearly close enough to 100% to matter. As our gap is not a true gap currently, the inventory position has less import anyways.

Responsive trade seems to be the play here so if you are trading in the day timeframe, I suggest that this be your M.O.

Given where we are in the range and how markets are acting, I’ll leave it right here.

Have a great day,
peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

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Last two sessions almost mirror image of each other as two days ago was short in the hole on the close and yesterday was long in the hole on the close. Both days had closes far from value and POC’s.

Yesterday afternoon’s run up was on the release of the FOMC minutes from the last meeting. As such, I generally see such moves as suspect and they often reverse within a couple of sessions. They don’t have to but they often do so I’m keeping that in mind. The ONH is just one tick above yesterday’s RTH high and is the upside reference at 2733.25.

As of now we are slated to open within balance and overnight inventory is net short but not enough to feel imbalanced at the open. The gap is not true (outside of the RTH range) so it has less import anyways. As a general rule anytime you open within balance (inside of prior day’s range), especially towards the middle of it, the higher odds setups are usually later rather than earlier in the day.

The ONL is just a couple ticks below halfback and as such is not a strong low. Those are mechanical buyers there more than likely. I would expect that a breach of the ONL puts the POC at 2714.75 into play.

The market remains balancing within the 40 point range we’ve been discussing. The longer we balance here, the stronger the odds are that we break upwards. Generally long consolidations don’t fall apart to the downside that often. 2742.24 is the upside reference in the S&P cash index. Thus far this level has been tested twice.

Have a great day,
peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

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Double digit gap to the downside today and slated to open outside of yesterday’s range. Gap rules apply.

Overnight inventory is 100% net short. Thus the early trade is to watch closely to see if there is a fade move. I believe the odds of this are pretty good as yesterday’s RTH close was on a spike and far from the value area and the POC. The ONL is at 2704.50; look for early trade to fail to take that out and then look for the possible counter move higher. As this gap is large, don’t expect that it has to fill all the way (gap rule #2). Overnight halfback is at 2715.75, which is very close to the prominent VPOC of 5/18. This could be a target for a fade.

If value starts to develop much lower, early, then by all means “go with all gaps that don’t fill right away” (gap rule #1).

In the bigger picture, the key downside level is 2700.50 which is the 5/15 low. This represents the low end of the balance area. Any acceptance below this level puts the current slightly bullish bias into question.

-peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

WWW.WINDOTRADER.COM/SHADOWTRADER

The gap from yesterday did not fill, carry it forward along with the two prominent POC’s of the last two sessions as well.

Overnight inventory is balanced to slightly net long and as of now we are slated to open with balance (inside of yesterday’s RTH range). Am noting that the entire overnight range is contained within yesterday’s RTH range. When I see that, I simply note that prices are deemed fair here and the market is in balance for the time being.

The 5/14 high at 2741.25 which is the top of the recent range and the 61.80% Fib level is our main upside reference. Obviously there is an RTH high and yesterday’s high to clear before that is in play. In a bullish scenario, how easily the market can cut through those shorter term resistances will tell you a lot about whether or not the market will break through that upside reference.

If the move is down today, then the POC will be in play and the game will be all about whether or not the gap fills.

Remember that the market can simply balance as long as it wants within the range between the two Fibonacci levels that we’ve been discussing. Internals are key as is tempo and feel.

Have a great day,
peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

Huge gap higher right on the 6pm EST open as investor sentiment rides the tariff carousel. Or perhaps roller coaster would be more appropriate. It’s on, it’s off, we’re doing this, we’re doing that, it’s $200 billion, no it’s $500 billion, whatever. For the life of me I cannot understand how and why the market is not continually going down on simply the uncertainty caused by all of this. Instead it’s being led around on a leash by policy that is completely scatterbrained, economically unsound, and changes from one day to the next according to the whims of one person. The market should be reacting much more strongly to the ambiguity but it’s simply not. Keep calm and carry forward, I guess.

Overnight inventory is 100% net long (as if you didn’t know that), and there is a true gap below us. Gap rules are in play.

Early trade today is going to tell us a lot about the tone as far as whether or not the gap is going to hold or not, especially given the fact that it’s completely news driven and it simply takes a lot more to get the RTH session rallying than it does the overnight session. As it stands now at around 9am EST, S&P futures are well off the ONH which is at 2736.25. The ONL is at 2724.25 and is the first downside reference. There is a gap below that and Friday’s RTH high as the futures opened on a large gap on the 6pm Sunday bell.

Scenario one:
The ONL is taken out on good tempo and weak internals. Friday’s RTH high at 2719.75 is the first target. Further weakness puts the TPO POC at 2715.00 into play. Note that this POC is very prominent, containing every single TPO period of the day except for the shortened “O” period. Prominent POC’s have greater odds of being tested so carry that one forward even if not touched today.

Scenario two:
The market does not fill the gap but rather uses today’s session to balance off the overnight inventory by time and not price. Futures would remain within the overnight range and not touch Friday’s RTH high. This would be relatively difficult to trade in the day timeframe.

Scenario three:
The market will either be strong from the open and rally towards the ONH, or will fill the gap partially or fully and rally back immediately. This would be a longer term bullish signal as the market acted “properly” by coming back in and filling the gap before rallying. Such a move would eventually target the ONH and higher.

Have a nice day,
peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

WWW.WINDOTRADER.COM/SHADOWTRADER

Last four sessions (two RTH, two overnight) are all almost identical. Market is in balance. Note also how last two RTH lows are equal. Visual, mechanical references telling us that shorter term traders are pushing prices around in a small range.

The RTH high and low of yesterday’s session are the upside and downside references coming into today’s trade given that yesterday’s range is slightly larger than the prior one.

Taking out the double bottom of the last two sessions at 2711.00 puts the 5/15 low back in play at the 2700 area. Remember that we turned just above a gap fill at that key level recently.

On the open, overnight inventory is quite net long even though we are currently gapping down about 5 points in the S&P futures. If early trade cannot get a foothold lower, expect possible rotation back to the settlement and POC which are at very similar levels.

Overall the market is in balance between the 61.80% Fib and the 50% Fib level that I’ve been discussing.

Have a great day,
peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

Balanced to net short overnight inventory; entire overnight range within yesterday’s RTH range. Market is in balance for now.

This is an important time to understand market action within the larger context. Here’s what we know:
-The market touched a key 61.80% Fibonacci level two days ago and backed off.
-The next day was bearish but only down to the 50% Fibonacci level and missed filling a gap by a few ticks.
-Putting 5/15 and the subsequent overnight session together on the chart (you can see it above), there’s a perfect 45 degree line from that RTH low to the widest part of the overnight session. Tells us that sellers are stuck down there.
-Yesterday we move higher immediately off of the open but end up having more of a balancing day rather than a trending day.

What can we project forward from the data market generated information that we have above?

1. The market is balancing between those two Fib levels for now.
2. If the lower one doesn’t get taken out, the odds would favor a higher move at some point.
3. If we start to find acceptance down below the lower one, then the market may be telling us that the 61.80% Fib touch was firm and is a top.

Just like when the market is inside of the prior day’s range we expect smaller moves, we should also think the same way about the larger range. Breakouts, fades, etc can and do fail when market is balancing. Remember that the move from the 5/3 low to the 5/14 high was quite large. Thus far we have digested (consolidated) very little of it. For now the way the market is acting I would say it wants more upside, but it may take a little time to do that. Know where you are in the “cycle” and trade accordingly.

Have a great day,
peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

WWW.WINDOTRADER.COM/SHADOWTRADER – CLICK TO ENLARGE

Yesterday gave us lots of information about what the market is doing currently. Let’s recap.

-It was the first day of a new down trend after a reversal day at resistance the prior day.
-Selling was not nearly as strong as one would expect given the context.
-There was a gap to fill from the 5/9 TO 5/10 session the bottom of which was 2700.00. Yesterday’s RTH low stopped short by a few ticks of that level, never truly filling the gap.
-The TPO POC could be more prominent but one could make the argument that there is a 45 degree line from the low to the widest point of yesterday’s distribution. Again, slightly too steep but let’s say 45-ish. That’s a sign that sellers are painting themselves into a corner as progressively less and less value is developing at lower and lower levels.

Coming into this morning, the market generated information (the overnight session) that we now have as data is confirming all of the above. The bulk of the overnight session is squarely within yesterday’s value area. The ONL is nowhere near yesterday’s RTH low so there is no price exploration lower at this point. Beyond that, the overnight distribution is very symmetrical and balanced.

Let’s think ahead to what could happen today….

-Value develops relatively equal to yesterday. This would confirm everything above and that the market is consolidating (working off the froth) more by time than price. If so you’ll start to see strong stocks (like NFLX for example) start moving higher ahead of the market.
-The market moves down hard below yesterday’s low and starts to develop value clean to the downside. In such an instance the job would be to constantly monitor for continuation. If it’s going to be anything, then it should get out of yesterday’s range and stay out of it.
-The ONH and RTH highs get taken out on good momentum/tempo. This would tell us that there are almost NO sellers in this market and that the recent pullback was just a slight reaction to the 61.80% Fibonacci retracement and the market is headed much higher.

In Profile Speramus……
-peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

www.windotrader.com/shadowtrader

Apologies for lack of commentary today, computer issues and some other stuff going on this morning….

Gap rules apply!
-peter

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

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Overnight inventory almost 100% net long except for a few ticks where futures gapped down on the Sunday open. Apparently buyers exhausted themselves a bit in the Globex session as prices pushed far into new swing highs but are now only up 3 and 10 on the S&P and Nasdaq 100 respectively.

Futures are currently trading just above Friday’s RTH high at 2732.50. Note that this high was poor so there is still not a proper end to the up auction. Acceptance back within Friday’s range at any point today puts Friday’s value area and it’s POC’s (TPO/volume) into play.

The upside reference this morning would have to be the ONH at 2741.00. Given the context of the overnight high, a market that has been up several sessions in a row with no real pullback, it may be difficult to get long and look for further continuation while still inside of the overnight range. Could the market rally early and keep going? Certainly, but there are days when the market favors the long side and days when it favors the short. I would say today is the latter. Note that this answers the question “What should the market be doing?” I believe it should be pulling back a little. If we get none of that carry it forward.

Scenario One:
Overnight supply in the form of all the longs above us will come into play and the market will re-enter Friday’s range which will put VAH, ONL, volume POC (2726.75), TPO POC (2723.75) into play.

Scenario Two:
Futures will rally early and move to the ONH and begin to find acceptance there and even higher. While I maintain that this would not be a safe bet, it can happen and if so is setting up the move to the 61.80% Fibonacci level that I discussed in this weekend’s video. I’ve reposted it below.

Scenario Three:
Either the move into Friday’s range will be short lived and shallow or it won’t happen at all but the ONL won’t be taken out either and value will develop completely within the overnight range. Given how I see the market acting currently and the lack of sellers out there, I actually see this as the highest odds scenario. If so, there is probably no day timeframe /ES trade to be had and the addition to your narrative would be a mark in the bullish column.

Have a great day,
peter