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

Peter Reznicek
Peter Reznicek
Co-founder/Head Trader, Peter's Premarket Perspective, Weekly Options advisory Email Peter Reznicek
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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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