Market ProfileA way of reading the market that recognizes either time spent or volume traded at a particular price level. A market profile can be either made up of “TPO’s” (time price opportunities), or volume. TPO’s measure how much time was spent at a particular price, while volume-based market profiles measure how much volume traded at a particular price. Generally, market profile is used in the trading of futures, especially the /ES. ShadowTrader utilizes volume based profiles. Value Areas and POCPoint of Control, also known as the "fairest price to do business". It is the price level in the /ES where the greatest amount of volume in the prior RTH session traded. ShadowTrader measures the POC using volume but the traditional way is to mark off the widest point of the day's distribution where the most TPO's printed going across from left to right, indicating that that was the price where the most time was spent. It's important to pay attention to both the volume POC and the TPO POC. figures for /ESH7 and /NQH7 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.
12/28 liquidation breakA sharp downward break in price that often seems to come out of nowhere and is usually short lived. It is caused primarily by short term traders inventory position getting overly long and initiated by those most recent longs who have the poorest trade location. proving to be not much more than that for now as yesterday’s RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. prices were not able to close below that day’s low while settling out at basically unchanged.
This morning is showing overnight inventoryA way of measuring overnight activity in the futures market by just noting how much of the overnight activity happens to fall above the prior day's settlement value (4:15pm EST close) and how much falls below. If more activity is above the settlement, then overnight inventory is said to be net long. If more is below, then it is said to be net short. If all of the overnight activity is above the settlement, then it is said to be 100% net long. If all of the activity is below the settlement then it is said to be 100% net short. The overnight inventory situation matters most and has the most impact on early trade when it is skewed 100% in either direction because when the imbalance is very large like that then the odds of an early correction increase greatly. This is due to the fact that most... at 100% net long. The usual rules apply. The ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day. is at 2252.75 and if it cannot be taken early (or prices rise above it and then fall below it), the odds of an inventory correction increase. On a follow through move higher, I would be targeting 2254.25 which is the top of the spikeA set of single prints that are created in the last 30 minute session of the day which form at the top or bottom of a range. from 12/28.
This is the last trading day of the year. I honestly don’t know if that means anything or if volume comes in a bit higher or what. Overall, I’m not expecting any major commitment to positions or longer term players emerging now. It is also the last day of trade before a 3 day weekend which usually spells lower volume chop.
Happy New Year……