Market Profile Analysis of S&P Futures 01.18.19

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

If you are here through Terry at WindoTrader, this is the final free issue. It’s been a pleasure sharing this information with you and I hope that I can count you as a subscriber in the near future. If you have any questions at all, feel free to contact me at asktheshadow@shadowtrader.net.

Some surprising news yesterday afternoon that the govt. is considering easing tariffs on China to calm the markets. S&P futures rallied hard on that, fell back to almost where they started, then commenced a slow climb higher which is still in effect as we go to press here. Let’s have a look at the market profile coming into today’s session…..

market profile

Purposely taking the snapshot this morning more close up so as to focus on yesterday’s structure. It was thin and emotional with an excess high. The overnight session has moved above that RTH high and thus we will carry forward that we don’t expect that to be the high of the move. Could be, but odds generally favor auctions ending in RTH sessions.

Overnight inventory is about 90% net long. 2649.25 is the ONH and is the upside reference. An early failure to take it could result in a liquidation break (fade) back through some of the single prints at the top of yesterday’s range. As of now we are trading on a true gap which is very small of just a couple of points away from the RTH high. If such a fade was to develop, target 2639.25 which is the base of the excess single prints and then VAH at 2636.50. Further weakness would probably look for the volume POC at 2635.00 and possibly halfback at 2625.50.

The volume was light for the later part of the session as shorts were squeezed on that news. Note the volume at the different price levels that runs alongside the distribution. Emotional short covering is what is happening there.

On the upside, there are two main levels which could be in play today if prices can move above the ONH. Those would be the round number 2650.00 and the VPOC at 2652.00. It’s too far to the left to see, but this VPOC is from the 12/13/18 session. Both could be in play today. How the market acts around the key 2650 level will be of most importance today. My first inclination is that it will have difficulty resolving it. If it doesn’t then it’s a sign of strength or rather melt-up as the case may be. It is options expiry today so a grind around that 2650 on middling internals could easily be in the cards for today’s session. Keep that squarely in mind if you are trading in the day timeframe.

Yesterday’s action was very interesting as it came right at some very pivotal technical resistance in the SPX and NDX. As I’ve been discussing in recent ShadowTrader Video Weeklies, the NDX is right at main down trend line resistance and the SPX was at a key Fibonacci resistance yesterday. The surprise news took both of those indices above those levels. We are also trading just inside the base of the “box area” that I talked about at length while it was forming in November. There should be resistance here but as of now it appears that it is being ignored. I’ll leave you with a daily chart of the SPX cash that hopefully gives more perspective on exactly where we are.

spx chart
SPX – Daily with box and Fibonacci retracement from 12/3 high to 12/26 low

Many more nuances and details to come in this weekend’s video…….

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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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