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