Market Profile Analysis of S&P Futures 01.11.19

Peter Reznicek

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Good Morning

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A slightly wider angle on the market profile chart this morning to show the current overnight action within the context of the entire recent rally.

Value continues to be overlapping to up with some “iffy” structure along the way.

Coming into this morning, overnight inventory is balanced to slightly net short. Given the recent context, I view that as short term bullish.

As of now we would open squarely within yesterday’s RTH range, thus gap rules do not apply. It should be noted that then entire overnight range is within the value area as well. I generally feel that this has stronger odds of pointing to a rotational and balancing day. Obviously, the RTH session is always a different animal than the overnight session, but it’s always good to think of different scenarios in your mind premarket and sort of rank them in terms of their odds of occurring. Yesterday was a perfect example of this. As I wrote, the 45 degree line in the overnight session was important and as such had high odds of acting as support during the RTH session. That is exactly how the session ended up playing out as early weakness didn’t even get to the ONL and then rallied hard from there to a new two day high.

For two sessions in a row now, the S&P futures have come within striking distance of the psychological 2600 level. Both of the last two RTH sessions have a lack of material excess but I would not consider them poor as there is minimal excess and the structure simply isn’t wide enough at the top to have me thinking that a large imbalance of buyers are trapped at bad prices at the top. There are definitely some, but the structure doesn’t imply that there are lots so far.

I would say that the upside reference for today remains the 2600.00 level in the futures as prices have shied away from just below it a couple of times now.

On the downside we would have to see acceptance below yesterday’s RTH low at 2562.00 to get anything meaningful going on the downside. One of the hardest things to reconcile (at least for me) is when the tone of the RTH session completely ignores the tone of the overnight session. Keep that in mind. While I don’t think that the conditions are there yet for a trending day lower, anything can happen. Close your eyes and repeat after me…“I don’t need to know what the market is going to do to make money, I just need to react properly when it does. Whatever the outcome, I am ok with it. I will not impose my will or opinion on the market because I know that this can blind me to opportunities”….Aaauuuuuuuummmmmmmmmm. (You don’t need to do the “om” part, I just added that for fun)

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Have a nice day,
-peter

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Peter Reznicek

Peter Reznicek is the founder of ShadowTrader.net and writer of Peter's Premarket Perspective, a morning market profile blog to help people plan their trading day and organize their thoughts before the market opens. He can be reached at asktheshadow@shadowtrader.net.

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