Peter’s Premarket Perspective
You CAN Understand the Futures Market! STOP Guessing!
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4 Benefits of Peter’s Premarket Perspective
No more “shock and awe”
Do you often wake up to large gaps and then either panic out of your current
positions or enter a new trade early only to have it reverse hard in your face starting your day with a big loss?
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What is Market Profile
Developed by J. Peter Steidlmayer in 1980 and refined by James Dalton through the groundbreaking text “Mind Over Markets”, market profile is simply a way of organizing market generated information by incorporating the “3rd element” of time in addition to price and volume. Normal, two-dimensional charts are just that, two dimensional. They only show you how high or low price has gone and how much volume traded during each bar. Market profile tells us this as well but also keeps track of how much time was spent at each specific price level, thereby giving us a much better indication of where traders deem prices to be fair versus unfair. This creates enormous opportunities for the educated trader who knows how to read market profile.
Traders Who Don’t Start Their Day With Premarket Perspective Vs Traders Who Do
 |
 |
|---|---|
✔ Don’t understand the difference between price and value, therefore make decisions out of fear because of fast moving prices |
✔ Stay on the top of their game by being aware of the difference between price vs value
|
✔ End up making trading decisions solely on guesswork and feel a.k.a GAMBLING, a surefire way to lose all your money |
✔ Are prepared to make money with daily insights and all the key levels marked off on their charts for a successful day |
✔ Are constantly confused and always asking “what is this market doing” |
✔ Know when to go for bigger gains rather than scalp for small moves because the odds favor it |
✔ Make foolish decisions by starting to trade right after the bell everyday |
✔ Are skilled at reading overnight action & will recognize opportunity when everyone else is anxious |
✔ Run after tiny profits while suffering large losses that wipe out many days of gains |
✔ Trade less often and with more precision and with a framework that gets them the gains they desire |
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Peter’s Premarket Perspective | Tuesday, July 20, 2021
The Market Profile value areas and ShadowTrader Pivots for /ESU21 and /NQU21 Futures are posted free every morning in the ShadowTrader Swing Trader newsletter.
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Click HERE for a market profile key that will help you interpret the chart above.
| Opening In/Out Balance | Out of Balance |
|---|---|
| Overnight Inventory | 100% Net Long |
| Current Price/Overnight Range | middle third |
| Shock and Awe | yes |
| Potential for Early Trade | yes |
| Short Term Bias | /ES & /NQ below daily 20SMA |
| 4314.25 | Top of Gap |
|---|---|
| 4272.00 | Bottom of Gap |
| 4254.00 | POC / ONL / Settlement |
| 4224.00 | RTH Low (Poor) |
Ongoing Narrative / Commentary
Yesterday, I mentioned to shift your focus slightly to the “bigger picture” items that everyone can see. That turned out to be prescient as yesterday’s low in the SPX cash was right to the 50SMA daily where a poor low was formed and short covering ensued. This morning’s solid gap higher has buyers building on that low.
Pulling back to a wider view shows us that there is still a very large unfilled gap above us from yesterday. Opening prices are going to start the day within that gap. The market doesn’t like gaps and gaps should fill. If they don’t, we have a WWSHD moment which gives us some M.G.I. to work with. Failing to cross the ONH today would be a sign of weakness.
Given the size of the gap above us and the fact that overnight activity filled very little of it, and we are currently well off of the ONH tells me that short covering may be already on the wane. The RTH session can be a very different animal from the overnight one, but those are the initial impressions.
Scenarios
- Gap rules are in play for today’s session. The overnight inventory is 100% net long so we know what should happen in early trade which would be the corrective move. Early trade will tell us a lot about the nature of the short covering in the overnight session. A lack of early fade will mean that buyers are not done and we should bias long, monitoring for continuation as we go.
- Note that the ONL and settlement are almost identical. That means that once all overnight longs are relegated to the “wrong” column, screens will go red around the world as well. I would bias short below that level. The RTH Low was poor yesterday and should be carried forward as well for a potential further short trigger as it needs to be repaired. An argument could be made that it is a weak low as well because it was a bounce from that 50sma daily.
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Peter’s Premarket Perspective | Friday, January 15, 2021
The Market Profile value areas and ShadowTrader Pivots for /ESH21 and /NQH21 Futures are posted free every morning
in the ShadowTrader Swing Trader newsletter.
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Futures a bit divergent on a small gap down this morning possibly on the heels of bank earnings and digestion of President Elect Biden’s unveiling of economic stimulus package yesterday evening. Both sides currently underwater but earlier action saw S&P’s down by about 17 while Nasdaq 100’s positive by 5.
As of now we are opening out of range on a true gap lower. While that does put gap rules into play, we are well off of the ONH and also not outside of the larger balance area. Overnight inventory is close to 100% net short and we are currently ticking in the mid to lower third of the overnight range.
The lowest Key Level listed above is the ONL which also corresponds closely with the 1.7 RTH Low. It could be argued that this RTH Low is the low end of the balance area as value has been tracking relatively unchanged from the value area of that day for five subsequent sessions. As such it is a potential downside break out level.
On the upside we will look at the usual signposts should there be a counter trend rally to the overnight trade. Look for futures to test the RTH Low first and monitor for continuation from there to the usual markers such as VAL, etc.
Today is the last trading day before a 3 day weekend due to the federal holiday on Monday. As such we may see volume taper a bit in later trade. That generally leads to unexpected breaks in either direction. Along the same lines, divergence between the /ES and /NQ also makes things slightly harder to navigate. Use context wisely to determine which side has the upper hand before trading in the day timeframe today.
Scenarios
-
- With six sessions of balance now potential continues for a larger break in either direction. A discussed above, the ONH/ 1.7 Low area could trigger overhead supply. If so, target that VPOC of 1.6 at 3740.00.
- Although not fully in a shock and awe open, overnight inventory could lead to an opening imbalance correction upwards.
If so, look to the RTH Low as a potential target and monitor for continuation. The early trade today will be decided by whether this inventory will correct or not. Given that we are well off of the ONL already and still within range, such a fade is by no means a slam dunk.
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Peter’s Premarket Perspective | Thursday, January 14, 2021
The Market Profile value areas and ShadowTrader Pivots for /ESH21 and /NQH21 Futures are posted free every morning
in the ShadowTrader Swing Trader newsletter.
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| 3824.50 | ONH / New ATH |
|---|---|
| 3817.75 | ONH |
| 3806.00 | POC / Settlement |
| 3804.25 | ONL (45 degree line) |
Overnight activity is very compressed with little range to show for an entire evening’s work by the Globex crowd. As of now we are still trading within the prior day’s range and also within the larger balance area that we discussed yesterday. Continue to carry that forward in your narrative. Overnight inventory is close to 100% net long and we are currently trading in the middle to lower third of the overnight range.
The overnight distribution has a 45 degree line from it’s lows. As always, less import than seeing the same pattern in an RTH session but worth noting nonetheless. Assume the ONL could be secure in today’s trade.
Overall, there continues to be little to say as the market remains within balance. Balance rules continue to be in play for this larger multiday range. Value has been little changed over the last five RTH sessions.
The second scenario is left over from yesterday’s PPP by design as it’s still as relevant as yesterday.
Scenarios
-
- There is some potential that the ONL remains secure in today’s session due to the overnight pattern. I would bias long unless that ONL is taken out. I am keeping firmly in mind that for now overnight traders were not able to get any major upside breakout going and the session has been relatively muted
- Assume further balance while we remain within the balance area. Balance rules are in play. Go with any breakout from balance that has corresponding context of internals and tempo. Price action remaining within balance should be treated as responsive trade only.
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Peter’s Premarket Perspective | Wednesday, January 13, 2021
The Market Profile value areas and ShadowTrader Pivots for /ESH21 and /NQH21 Futures are posted free every morning
in the ShadowTrader Swing Trader newsletter.
WindoTrader 702-800-4628 Speak with Terry about the ShadowTrader discount
I could easily just have left yesterday’s commentary untouched and that would have been ok today. Absolutely no change yesterday as value was almost identical to the prior session. The balance area continues to get larger which should increase the size of the break when it comes.
Balance rules are in play and as such the Key Levels above are few by design. Think about all price action today in the context of the balance rules. Any activity within the balance area is responsive and the market telling us that it is waiting for more information before establishing value elsewhere.
Overnight inventory is very balanced and current prices on a small gap lower are trading in the middle to lower third of the overnight range. This M.G.I. has far less import than it would if we were opening out of range. Obviously, again a day to trade later rather than earlier.
Scenarios
-
- Assume further balance while we remain within the balance area. Balance rules are in play. Go with any breakout from balance that has corresponding context of internals and tempo. Price action remaining within balance should be treated as responsive trade only.
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$20 Buy NowPeter’s Premarket Perspective | Tuesday, January 12, 2021
The Market Profile value areas and ShadowTrader Pivots for /ESH21 and /NQH21 Futures are posted free every morning
in the ShadowTrader Swing Trader newsletter.
WindoTrader 702-800-4628 Speak with Terry about the ShadowTrader discount
Second session in a row where we have all overnight activity inside of the RTH range. Market is in balance with value relatively unchanged for three sessions. Overnight inventory is also quite balanced and we are currently trading in the middle third of the overnight range. All of that obviously points to higher odds opportunities presenting themselves later in the session rather than earlier.
Consider the last three RTH sessions to be a balance area. Apply balance rules to that range.
Liquidation breaks continue to be rebuffed. The market is continuing to balance off the most recent rally. I continue to carry forward that there is an ATH in an overnight session that is potentially unsecure.
Scenarios
-
- The usual way to look at balanced overnight inventory that is inside of the prior day’s range is to assume that said balance has potential to continue into the the day session. That being the case, expect responsive trade while we remain within range and use the extremes of both yesterday’s range and the larger balance area as go/no-go levels for larger initiative moves.
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