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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.

market profile premarkat data

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
  • End up making trading decisions solely on guesswork and feel a.k.a GAMBLING, a surefire way to lose all your money
  • Are constantly confused and always asking “what is this market doing”
  • Make foolish decisions by starting to trade right after the bell everyday
  • Run after tiny profits while suffering large losses that wipe out many days of gains
  • Stay on the top of their game by being aware of the difference between price vs value
  • Are prepared to make money with daily insights and all the key levels marked off on their charts for a successful day
  • Know when to go for bigger gains rather than scalp for small moves because the odds favor it
  • Are skilled at reading overnight action & will recognize opportunity when everyone else is anxious
  • Trade less often and with more precision and with a framework that gets them the gains they desire

Which Trader Are You?


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Peter’s Premarket Perspective | Friday, October 16, 2020

The Market Profile value areas and ShadowTrader Pivots for /ESZ20 and /NQZ20 Futures are posted free every morning

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  Key Levels for Today
3491.25 ONH
3481.00 RTH High
3470.25 ONL
3465.00 VAH

 

Small true gap higher on the heels of yesterday’s trending day upwards. Overnight inventory is balanced to net long. As of now we are slated to open out of range but not out of balance in the larger context. Current prices are very close to the ONH.

While it should be looked at as having less import than an RTH pattern, I’m noting that the overnight session lows formed a 45 degree line pattern. This is short term bullish and the overnight low should be seen as somewhat secure. That’s valuable M.G.I.

Yesterday’s reversal after a large gap down gave us more information about the state of stronger sellers or lack thereof. I will assume a bullish stance today unless the ONL gets taken out, causing the overnight 45 degree line to fail.

  Scenarios

    • While we are opening on a true gap which puts gap rules into play, overnight inventory is not 100% net long and there is no potential shock and awe caused by where we open. Thus, the better trade will probably develop later rather than earlier in today’s session.
    • As mentioned above, assume a bullish bias as long as price remains above the ONL, keeping that overnight pattern intact. Note that both the ONL and VAH are listed as Key Levels today as they would be two spots where there is potential for change.

     

     

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    Peter’s Premarket Perspective | Tuesday, September 1st, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESU20 and /NQU20 Futures are posted free every morning

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      Key Levels for Today
    3524.50 ONH (8.30) / Futures ATH
    3516.25 ONH
    3513.00 RTH High
    3490.00 RTH Low (Poor)
    3484.25 ONL

     

    The list of VPOC’s and unfilled gaps below us from the March lows.

    VPOC 17 (8.25) – 3430.50
    VPOC 16 (8/24) Prominent – 3416.50
    Top of Gap 3 – 3409.50
    Bottom of Gap 3 – 3396.25
    VPOC 15(8.21) – 3385.00
    VPOC 14 (8.6) – 3315.75
    Top of Gap 2 – 3310.50
    Bottom of Gap 2 – 3300.50
    VPOC 13 (8.4) – 3292.25
    Top of Gap 1 – 3276.50
    Bottom of Gap 1 – 3267.00
    VPOC 12 (7.31) – 3227.00
    VPOC 11 (7.14) – 3163.25
    VPOC 10 (7.1) – 3104.25
    VPOC 9 (6.30) – 3064.00
    VPOC 8 (6.29) – 3028.75
    VPOC 7 (5.22) – 2935.75
    VPOC 6 (5.18) – 2843.00
    VPOC 5 (4.22) – 2730.00
    VPOC 4 (4.7) – 2620.00
    VPOC 3 (3.30) – 2531.00
    VPOC 2 (3.26) – 2478.00
    VPOC 1 (3.24) – 2231.00

    I thought the bananas were appropriate for this issue’s image because that’s pretty much how the market is acting lately, bananas. Yesterday’s RTH session was very wild and made very little sense from a a technical perspective. The divergence was huge with NDX tacking on almost a full percentage point at the close while SPX lost almost a quarter point.

    To a degree, the wild divergence continues today with the /NQ’s up over 4x what the /ES is currently trading.

    Liquidation breaks and sharp short covering rallies seem to be the M.O. lately so comport yourselves accordingly. Responsive trade may be bigger than you will imagine. Use that to your benefit.

    This overnight session has us trading on a small gap higher but not a true gap. Gap rules are not in play and the easier (read: higher odds) trade will probably develop later rather than earlier in today’s session. Overnight inventory is balanced to slightly net long. Interestingly enough, there is overnight activity above both extremes of the RTH session. That only points to massive indecision to me and confirms further that the market will need some time today to show its hand.

    I continue to carry forward the overnight high from 8.30 which is still the high of this move. As far as RTH sessions are concerned, there was some proper excess to yesterday’s auction. I carry that forward as well.

    Yesterday’s low was poor and is in need of repair.

    While everyone’s focus is on what the Nasdaq 100 is doing, don’t be distracted from the fact that the SPX is clearly struggling. Structures have not supported the advance and value isn’t really moving. Too many people getting long and not getting paid for it can only end in one way.

      Scenarios

      • The very large overnight range that engulfs the RTH range and is currently trading within balance gives little clue as to how futures will react in early trade. The better trade should develop earlier rather than later. Recently, I’ve discussed ruling reason. The current ruling reason is that Nasdaq stocks are in a bubble and are pulling everything along with it. That, and the fact that the /ES is going along very stubbornly are both huge pieces of M.G.I. to keep in mind as you navigate the session.

     

     

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    Peter’s Premarket Perspective | Monday, August 31st, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESU20 and /NQU20 Futures are posted free every morning

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      Key Levels for Today
    3524.50 ONH
    3506.75 RTH High (Poor)
    3501.75 Top of Single Prints
    3498.75 Bottom of Single Prints
    3492.00 POC (back to back at same level)

     

    The list of VPOC’s and unfilled gaps below us from the March lows.

    VPOC 17 (8.25) – 3430.50
    VPOC 16 (8/24) Prominent – 3416.50
    Top of Gap 3 – 3409.50
    Bottom of Gap 3 – 3396.25
    VPOC 15(8.21) – 3385.00
    VPOC 14 (8.6) – 3315.75
    Top of Gap 2 – 3310.50
    Bottom of Gap 2 – 3300.50
    VPOC 13 (8.4) – 3292.25
    Top of Gap 1 – 3276.50
    Bottom of Gap 1 – 3267.00
    VPOC 12 (7.31) – 3227.00
    VPOC 11 (7.14) – 3163.25
    VPOC 10 (7.1) – 3104.25
    VPOC 9 (6.30) – 3064.00
    VPOC 8 (6.29) – 3028.75
    VPOC 7 (5.22) – 2935.75
    VPOC 6 (5.18) – 2843.00
    VPOC 5 (4.22) – 2730.00
    VPOC 4 (4.7) – 2620.00
    VPOC 3 (3.30) – 2531.00
    VPOC 2 (3.26) – 2478.00
    VPOC 1 (3.24) – 2231.00

    Interesting dynamic unfolding this morning as overnight inventory is 100% net long, however, we are trading at extreme low end of a relatively tall overnight distribution and threatening to come back into range at this moment.

    Structure has been poor for some time on this rally and Friday was no exception. Prices closed near the high of the session and yet value was unchanged and the volume POC ended up below halfback.

    While new all time highs in any overnight session are always a carry forward in the sense that odds don’t favor them remaining as the all time high, it is noteworthy that we are so far off of the ONL. Thus my initial read is that there should be overhead supply at the open from all of the overnight players with poor location. The open today will be all about how that plays out. Will short term traders who are long from higher and need to dump futures at the open to cut losses be dominant or will longer term traders who see prices not too far ahead of Friday’s close see the open as a buying opportunity?

    If we open above the RTH high then gap rules will be in play, if not then they won’t.

    In the case of any weakness in today’s session that moves into the RTH range, there are three Key Levels that could be in play. The first two are the endpoints of the single prints that printed late in the session. While I’m not officially naming this as a spike because there was some acceptance above it in N and O periods, I am cognizant that it was late in the day. The third is the volume POC which was identical to Thursday’s volume POC. A such, this level is a high volume node which could attract prices (think: target!) on stronger selling.

      Scenarios

      • While overnight inventory is 100% net long which would set the tone for a potential fade, prices are already at the extreme low end of the overnight distribution and could find support at the RTH High. If we open near the RTH High, then longs can be taken early with tight stops just inside of range.
      • An opening drive lower or later movement into the RTH range should target the single prints and subsequently the volume POC. Monitor for continuation, context is king.

     

     

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    Peter’s Premarket Perspective | Tuesday, August 18th, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESU20 and /NQU20 Futures are posted free every morning

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      Key Levels for Today
    3388.75 ONH
    3382.75 RTH High / Balance Area High / Triple Top 8.12, 8.13, 8.17
    3379.00 TPO POC (Prominent)
    3374.00 RTH Low

     

    Slight gap higher just above the now four day balance area on overnight inventory that is very balanced. That in and of itself doesn’t bode well for a breakout as for now traders are still showing indecision as to which side of 3382 they want to be on. If we open above, then we have a true gap and gap rules are in play. As of now we are trading in the upper third of the overnight distribution. Nasdaq futures are showing a lot of relative strength being up about 3x what their S&P counterparts are.

    Balance rules are in play again and we will look at today very similarly to yesterday. The RTH High is the main go or no go level. Prices above favor moving out of balance and higher towards the SPX cash all time high target at 3393.52. Prices below keep the balance in play and also bring in potential to rotate back down to low end of balance which would be the 8/12 RTH Low at 3353.50.

    Carry forward into your narrative the very prominent TPO POC from yesterday’s RTH session. Prominent POC’s have greater odds of being revisited than less prominent ones. At the 3379.00 level only one thirty minute TPO period failed to trade there. POC’s are good places to end trades (targets) rather than start them. Prices are naturally drawn to areas of higher volume (think: value) and rejected by areas of lower volume (think: lack of value).

      Scenarios

      • The market is still trying to resolve the four day balance. As of now we are trading back above the high of that area. Assume a bullish stance as long as prices remain above 3382.75. Monitor for continuation for potential move to the SPX all time high.
      • Any move below that balance area high level has good odds of tagging the prominent POC. If there are stronger sellers present then the RTH Low will get taken as well and then the lower end of the balance area is in play as discussed above.

     

     

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    Peter’s Premarket Perspective | Monday, August 17th, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESU20 and /NQU20 Futures are posted free every morning

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      Key Levels for Today
    3382.50 Balance Area High / Double Top 8.12 & 8.13
    3353.50 Balance Area Low

     

    Small gap higher this morning and just a hair outside of Friday’s RTH range but still well with the larger 3 day range. That means that as of now we are opening in balance. Overnight Inventory is 100% net long, but is of less importance as we remain in range.

    Balance rules are in play. The last three RTH sessions have had unchanged value and two of the three are a double top.

    Today’s session will be defined by which of the balance rules outcomes are in play. While all RTH sessions have the capability to be completely different from the overnight sessions, it is of note that the overnight distribution thus far is very small and symmetrical and mostly balancing within Friday’s range. That, of course, points to “door number three” which should never be discounted as a potential outcome of remaining in balance.

    The all time high in the SPX looms very close above us. That is the target should an upside breakout take hold. Note that everyone is seeing the same thing and looking at the same target. To that end, while the odds favor a move to this level, it does not have to happen. Assumptions can often get you killed in this game.

      Scenarios

      • Balance rules apply, go with all breakouts from balance that are accompanied by confirming context of internals and tempo.
      • Breakout from balance that fail should target the opposing end of balance. Any prices today within the balance area should assume responsive trade.

     

     

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    Peter’s Premarket Perspective | Thursday, June 18, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESU20 and /NQU20 Futures are posted free every morning

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      Key Levels for Today
    3101.00 VAL
    3094.50 RTH Low
    3063.00 – 3064.50 6/16 RTH Low / ONL

     

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    Strong gap lower this morning and out of balance. This makes it a true gap and puts gap rules into play. Overnight inventory is about 80% net short and we are currently trading in the middle third of the overnight range.

    As value was unchanged yesterday and the entire RTH range was inside of the prior day, I will look upon these two days as a two day balance. That tells me that for now prices are breaking out of balance to the downside. Think about this as the market opens. The balance rules tell us that only a few different things can happen. Let’s focus just on breaking out of balance to the downside. Technically, this has already happened in the overnight session so your early focus today should be on whether or not we have a look below and go or not.

    I am carrying forward into my narrative this morning that VAL of the last two days is relatively equal. That’s why it’s listed in the Key Levels above. We know that this is the outer downside edge of where 70% of the volume traded over the last two sessions. Finding acceptance back within that area would tell us a lot about the market. I will also think about this area as a potential resistance where prices could reject as we know that there would be a lot of longs “looking to get back to even” as prices come back there. Always try and use the profile to tell you where longs and shorts lie and what is making them disappointed or content. That’s really this whole game in a nutshell. Charting, market profile, all of it is just quantifying that one dynamic.

      Scenarios

    • As with any true gap on net short overnight inventory the first move will be to look for a fade. Any such move should go to at least the RTH low to fill the gap. I am noting that with two days of balance and value there could be sellers there and a shorting opportunity.
    • Continuation into yesterday’s range would be the more bullish outcome. If not long already from earlier, I would not take any longs until acceptance back within the VA is found. If so, monitor for continuation and look for a move at least to the settlement.
    • An opening drive lower that fails to fill the gap would be the most bearish scenario today. Understand that this would be a continuation move from the overnight activity and thus is the hardest type of play to pull off as location is not as specific and hence stops are wider. In any such scenario, assume that the ONL is in play. Internals confirming would be a must!

     

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    Peter’s Premarket Perspective – Friday, January 10, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESH20 and /NQH20 Futures are posted free every morning

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      Key Levels for Today
    3287.00 ONH
    3276.75 RTH High (Poor)
    3273.00 POC

     

    Gap higher once again as we remain in this melt-up phase coming into the Q4 earnings period. /ES +4.00 currently on a true gap higher, putting gap rules into play. We are quite far off of the ONH currently which is one of the first things I noted when looking at the overnight distribution.

    Yesterday’s fade to close the gap as expect with minimal motion back within the prior day’s range. I expect the same today. Short term players can, of course play for the gap fill given that overnight inventory is 100% net long. The usual trigger by failing to take out the ONH early would be your M.O., targeting yesterday’s RTH high.

    Being once again in all time high territory leaves me with less to say. I continue to be biased long and see no signs of any sellers stronger than the occasional liquidation break. Internals have not been as bullish as I would like on these advances and I am continuing to carry that forward. Additionally, the structure on the last two RTH sessions has not been that supportive of further advance. As I said in yesterday’s report, these are data points against a currently very bullish context so keep things in perspective.

      Scenarios

    • Being that we are well off of the ONH currently (that can change by the time you read this!), the potential to fill the remaining part of the gap is there. That trade would probably develop very early if at all. If that’s the play, monitor for continuation into the RTH range and target the POC for further gains.
    • A market that fades only slightly and wants to at least hold the overnight range if not go even higher, will have a NYSE tick opening strong that won’t breach the zero line for most of the morning session. If such a gap and go scenario should develop, longs targeting the ONH can be taken with stops under LOD or just inside of the RTH high.

     

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    Peter’s Premarket Perspective – Thursday, January 9, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESH20 and /NQH20 Futures are posted free every morning

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      Key Levels for Today
    3274.00 ONH
    3267.75 RTH High (Poor)
    3252.00 Halfback

     

    Nice true gap higher after yesterday’s Middle East Debacle to De-escalation Balance Breakout (MEDDBB). Gap rules are in play and overnight inventory is close enough to 100% net long to take note of.

    The prior all time high which was in an overnight session was taken out again yesterday proving that we are still firmly in the “do what works while it does” phase rather than the “until it doesn’t”.

    Structure was just so-so and so were internals. I hope you all notice that while I carry that data forward, I don’t make it my main focus which is to pay attention to context, seasonality, and overall tone. That’s important. Where are we in relation to recent ranges? What time of year is it? Are liquidation breaks swift and short and being bought back up very quickly thereafter? Those are what should be dominating your narrative currently. When you are in a trend, those are what matter. When you are more rangebound, that’s when the market profile nuances shine more.

    As the /ES is trading at a new all time high in the overnight session, there is little to report. Halfback is listed purposely as a Key Level since yesterday’s RTH distribution was nicely elongated. A stronger market should not breach halfback, especially on a breakout day. That being said, I would like to see value at least overlapping to up today to confirm acceptance of these higher prices.

      Scenarios

    • As the gap is double digits, pay close attention to gap rules #2 and #4. The potential for a fade is there as it always is on any true gap but that doesn’t mean that context will come in to support it. Again, #2 and #4 tell you everything you should be thinking when the bell rings.
    • The high was poor yesterday but the close was relatively weak and prices went a tad lower in the overnight session. That tells me that the initial reaction to the poor high which is to back away may already be done and now the trend can resume. For that reason, I think the potential for prices to be supported early is stronger than the potential for a fade and the long bias will probably be the easier trade. That can develop in a number of ways from either a trigger over the ONH with stop under LOD, or by buying any small fade that either comes in partially or fills the gap fully and is a buy at the RTH High. In either case, monitor for continuation higher as there is no upside reference.

     

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    Peter’s Premarket Perspective – Wednesday, January 8, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESH20 and /NQH20 Futures are posted free every morning

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      Key Levels for Today
    3244.75 RTH High
    3231.75 RTH Low

     

    Huge range in the overnight session on further news out of the Middle East. Recovery was swift off of the lows and we are now trading on a decent sized gap higher. Currently, I’m seeing indications that we are inside of yesterday’s range so the gap is not true and gap rules are not in play for now.

    You’re probably wondering with all the fireworks last night how can there be only two Key Levels listed above? I chose this purposely to get your attention away from the overnight session and onto the RTH sessions which are all that really matter. Yesterday’s distribution was small and the value area was very compacted. This tighter consolidation is within a much larger balance area. As such, I believe that the endpoints of yesterday’s range are the main action points for today’s trade. I’m only concerned with the overnight range in the context that I see it as a very large liquidation break and know that liquidation breaks strengthen a market. See it as the fact that it happened and recovered is bullish going forward.

    The main question today to be asking is whether or not this larger balance area is ready to resolve higher or not. While it would be convenient to assume that over yesterday’s high it is and under it is not, it’s simply not that clear because of yesterday’s range being tucked into a larger balance. If you recall, in yesterday’s Premarket Perspective I laid out the case that the odds favored a tight market. This was confirmed by what I saw early on in market internals, tempo, and lack of follow through to early moves. In today’s session, I will simply be monitoring the same parameters to see if the market presents something different. If so, I want to see acceptance outside of yesterday’s range to the upside for long trades and acceptance below for possible short trades.

    Though it’s not listed above, you should continue to carry forward the fact that for like the umpteenth time there is still an all time high made in an overnight session up at 3263.50. Odds don’t favor it holding. As this has worked many times in the past, we should continue to expect it be true again unless OTF sellers arrive in the market.

    Lastly, with the rather squat profile distribution yesterday, it left a prominent TPO POC at its middle. That level is at 3239.25. Watch it today as a signpost for a market that is not ready to break out of balance just yet. More prominent POC’s (read: more value) act as magnets and not only pull prices to them but tend to hold prices there as the price is obviously deemed “fair” by a disproportionate number of market participants. A market that wants to remain in balance today will probably trade through and around the level multiple times.

      Scenarios

    • As of now we are trading dead in the middle of a small balancing day. As such, use the extremes of that session as potential triggers for long or short bias in today’s session. Overall, I believe that there should be at least some “shock and awe” at the open from those who may still be short in from the overnight session which would support prices today. If it doesn’t, then I’m going to monitor selling very carefully to see if it’s real or that the market is simply still balancing.

     

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    Peter’s Premarket Perspective – Tuesday, January 7, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESH20 and /NQH20 Futures are posted free every morning

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      Key Levels for Today
    3249.50 RTH High
    3234.00 POC
    3228.25 Start of Single Prints
    3227.50 End of Single Prints

     

    Divergence is the name of the game this morning as the /NQ’s are solidly green while the /ES is just slightly underwater. That divergence is important to carry forward into the RTH session because it usually sets the tone for a more choppy (read: responsive trade so go for smaller moves against inflection points) day that can be rangebound.

    Yesterday’s all out reversal from lows that drove through the single print area like a hot knife through butter (Earth Balance vegan only) is bullish in the short term in that it seems to have negated any news driven weakness of late. One of the most important things that you can carry forward is the fact that liquidation breaks or whatever variety strengthen rather than weaken a market because they take potential sellers out. It’s common for these moves to be taken out quickly and then have the market continue much higher later.

    Yesterday’s RTH distribution didn’t have the greatest structure to it, leaving a short trunk of single prints in the middle of the session which I’ve identified in the Key Levels above. The endpoints of single prints are always potential supports or resistances.

    The Key Levels listed are few this morning because as always I do my best to only put forth what I feel is relevant for the coming session. Anyone could list them all but that honestly doesn’t provide any edge. So for instance, I know that the ONH is higher than the RTH but I believe that has little import. The huge divergence between the two futures right now is going to be more of a driver of action and tone today than any minor nuances that I could point out. Keep focused on the bigger picture that way and you’ll always be fine. Speaking of, the current activity (Iraq/Iran news notwithstanding) is more than likely balancing off the recent rally that started on 12/3/19. Keep that in mind as well.

    Odds favor more responsive trade today given the divergence. Use FAANG’s as another internal today if you are looking at /ES.

    Lastly, I want to point something out since I know that we have a lot of newer traders joining us for this free week. Take a close look at the market profile picture above and note where the RTH high of yesterday was. Just two ticks above the POC (which was virgin until yesterday) from 1/2/20. These levels are real and they work. Very few people see them which is what makes them even more powerful for those in the know. Markets move from excess to balance and back to excess, pulling away from low volume areas to higher volume areas along the way. If you can continually just trade from that framework as your starting point, you’ll be in great shape.

      Scenarios

    • My focus today will be on yesterday’s range and where value develops. As there was range expansion yesterday, ideally bullish traders should want to see value developing in the upper part of yesterday’s distribution. The fact that the overnight session is very balanced and contained almost fully in the upper part of the distribution is a short term bullish sign and indicative of further balance in this area.
    • Anything more meaningful (read: directional) would only develop with a drive above the RTH high or a move below that single print section in the Key Levels above. I believe the reversal that characterized yesterday has sellers (shorts) a bit on edge coming into today’s session which may temper downside moves.

     

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    Peter’s Premarket Perspective – Monday, January 6, 2020

    The Market Profile value areas and ShadowTrader Pivots for /ESH20 and /NQH20 Futures are posted free every morning

    in the ShadowTrader Swing Trader newsletter.

    premarket
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      Key Levels for Today
    3221.00 RTH Low / Start of Single Prints
    3229.75 End of Single Prints
    3208.75 ONL (poor)
    3205.75 VPOC #11 (12/19)

     

    Solid gap lower this morning to just outside of Friday’s RTH range which puts gap rules into play. Overnight inventory is 100% net short.

    The overnight range is quite large coming into today’s session which makes the premarket read a bit more cloudy as there was plenty of activity inside of Friday’s range and also outside of it. As with any larger true gap, your first focus should be on the preceding session’s RTH Low. That is the first line in the sand that will either bring in larger (read: playable to upside with a buy) short covering or not. Remaining below the RTH Low is more bearish, finding acceptance back in range is less so. This particular open has an extra twist to it in that it is against the context of a long line of single prints from Friday. The low of those prints (RTH Low) is also Friday’s open. Movement into these prints should offer little resistance and traders should target the End of the Single Prints if upside continuation is in the cards. As long as we open outside of Friday’s range, gap rules are in play.

    On the downside we have a reference point in the ONL which was also poor. I always say the same thing about overnight patterns which is that they have far less predictive power than RTH ones but at the same time should not be ignored. For those of you new to this line of thinking, the poor low is an indication that sellers are nervous at that level and have not been able to find more players to further their campaign lower at that level. It’s almost always a sign of rejection of a certain price and the short term bias is in the other direction. Some of that has already happened in the overnight session with futures bouncing well away from that poor low and settling back into the middle of the overnight range currently.

    Note that there are two overnight lows (between 1/2 and 1/3 and last night) that are at almost the same level. I would watch this more as an “area” today rather than a specific level for that reason. Acceptance below this area would fill the first gap below us (#6) and then target the VPOC #11 at 3205.75.

      Scenarios

    • My first focus today will be whether or not there will be any playable fade off of the gap down to take prices to the RTH Low as a gap fill or not. If so, the play is to monitor for continuation into the single prints, eventually targeting the End of the Single Prints and potentially higher. This will be not be an easy read today because we are so far off of the ONL already and slated to open at about the midpoint of an expanded overnight range.
    • A weaker market (read: shortable) today will be characterized by either a failure to fill the gap or a fill that rejects quickly at the RTH Low and comes back down to the open. In such a scenario, the RTH Low can be a short entry point with stop over HOD, or the subsequent retest of the open can be an your entry point with a stop over the RTH Low.

     

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