Market Profile Analysis of S&P Futures 01.14.19

Peter Reznicek

The Market Profile value areas and ShadowTrader Pivots for /ESH19 and /NQH19 Futures are posted free every morning

in the ShadowTrader Swing Trader newsletter.

Good Morning

market profile

Good sized gap down which is slated to open just below Friday’s RTH range creating a small gap on the chart. As we measure gaps only from prior lows or highs and not from the prior settlement, note that the actual distance from Friday’s RTH low is just a couple of ticks even though we are about 20 handles below the settlement. If by the time the bell rings we are below the RTH low then gap rules will apply, if we are within Friday’s RTH range, then they will not.

I’ve marked off the 45 degree line in the overnight distribution. Note that the Wednesday evening pattern was the same and the market rallied early once it was apparent that the ONL was not going to be taken. Today could be a similar turn of events as the pattern is about the same. As always, I give the caveat that any pattern in an overnight distribution does not have the same import as a day timeframe one, but should always be heeded. I got a ton of emails on Thursday of last week from traders who held off on initiating shorts because of my writing. Losses saved are money earned.

In looking at the last three RTH sessions, almost all of the highs are pretty poor, culminating in Friday which is an actual poor high. I believe the current gap down has everything to do with that. As with any poor high or low, the first move is always the counter move as the weak handed longs trapped at poor location liquidate. These counter moves are usually short lived and the highs are then repaired. As long as the ONL at 2567.25 holds in today’s RTH trade, that is the scenario that I will expect. If there is acceptance below the ONL, then that theory is negated and the tone may start to change.

The VPOC at 2605.75 which is at the top of the chart is from the 12/13 session and is still valid as it has yet to be tested. A repair of the poor highs (should it come to pass) should target this level.

In a nutshell…
-The market is short term overbought and the last three highs indicate some “crowding of the plate” at the top. As such we are seeing some overnight liquidation. As of now there is little evidence that the top is in as there is no true excess high and value has been unchanged for three sessions at the top of a large move. The up auction could end this way but the odds don’t favor it.
-The 45 degree line in the overnight trade is important and points to sellers painting themselves into a corner which usually ends in a counter move. Again, the ONL at 2567.25 is the key downside reference. Holding above it in today’s session will result in short covering back into the three day range, movement below would be more bearish and start to change the tone.

This blog comes out at 9am every day and is available for $20 per month HERE.

ShadowTrader Tape Reader

Provides an essential edge for successful day trading in both stocks and futures contracts. A thinkorswim add on study that can actually “read the tape” and tell you how much is being traded at bid vs offer.

Learn More

Have a nice day,
-peter

TD Ameritrade, Inc. and Shadow Trader Technologies LLC are separate, unaffiliated companies and are not responsible for each other’s services and products

Don’t Have a TD Ameritrade Account?

Do you put on a blindfold when you drive too? Open an account with TD Ameritrade today and get everything ShadowTrader has to offer including the live SquawkBox and more!

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.

View all author Posts