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Market Profile Analysis of S&P Futures 03.12.19

Peter Reznicek
Peter Reznicek
Co-founder/Head Trader, Peter's Premarket Perspective, Weekly Options advisory Email Peter Reznicek
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The Market Profile value areas and ShadowTrader Pivots for /ESH19 and /NQH19 Futures are posted free every morning

in the ShadowTrader Swing Trader newsletter.

Lots to talk about this morning, plenty of market generated information out there. Let’s get to the market profile….

market profile
Now THAT’S some serious short covering!

Let’s begin by updating our narrative by taking a closer look at the last two trading sessions. Friday was our reversal day which culminated in a spike at the top of the market profile distribution. Spike rules yesterday morning told us that the most bullish outcome was an open above the spike which didn’t have any acceptance at all within the spike. That’s pretty much exactly what we got yesterday morning as S&P futures gapped and held staging an all day trending day advance.

Yesterday’s profile with it’s four separate distributions could easily be summarized in one phrase which would be “I’m so short, get me out NOW”. There was no pullback all day, not even the classic 2 or 2:30pm EST variety which allows the 15 minute RTH only 20SMA to catch up to prices. In almost every trending day, there is always one break of one time framing before closing higher. As shown in the picture of the expanded profile below, yesterday did not possess that characteristic. This is rare and should be carried forward into today’s session. What should you carry forward you might ask? The fact that the market is slightly more short term overbought than it would be had this pullback occurred.

expanded market profile
One timeframing

Coming into today’s trade, we have futures currently adding on a bit to yesterday’s gains with a current true gap of +5.75 in the S&P and +24.50 in the Nasdaq 100’s. Overnight inventory is net long but not 100% so. The ONH is at 2799.00 which is not surprising as that is a psychological resistance. Some backing and filling would be healthy here to solidify this rally a bit more. If we don’t get any of that today, given the overnight inventory situation and the lack of pullback yesterday afternoon, it is a strong sign of strength. Gap rules are in play.

On the downside, my main reference point would have to be the RTH high at 2790.00 which would represent a move back inside of yesterday’s range. Given the poor structure of yesterday (four separate distributions separated by single prints), some long liquidation could occur on such a move back into range. As always, be vigilant all day and note all things that should happen but don’t. They are often the most important pieces of market generated information you can find. Remember that every distribution in yesterday’s profile should be treated separately and the single prints that separate them are very often supports.

Lastly, a brief “look to the left” will show that current prices around low 2790’s are in a high volume node. This can also cause prices to be “sticky” for a bit and some consolidation may occur here. I’ve included a shot of the composite profile below showing this activity.

composite profile
Fair prices, indeed….

Have a wonderful day,
-peter

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