Peter’s Premarket Perspective | Monday, August 22, 2022

Peter Reznicek

The Market Profile value areas and ShadowTrader Pivots for /ESU22 and /NQU22 Futures are posted free every morning in the ShadowTrader Swing Trader newsletter.

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  Pre market indications
Opening In/Out Balance out of balance
Overnight Inventory 100% net short
Current Price/Overnight Range lower third
Shock and Awe yes
Potential for Early Trade yes
Short Term Bias breaking uptrend line / testing rising 20sma daily
  Key Levels for Today
4230.75 Settlement / POC
4220.75 RTH Low
4198.50 Overnight Halfback
4178.50 Top of Gap
4168.75 /ES 20 SMA Daily
4138.75 Bottom of Gap

Ongoing Narrative / Commentary

Large true gap lower as markets look ahead to Powell’s speech in Jackson Hole later this week, afraid he’ll put the hawk cap back on after huge inflation increases in Europe and UK last week. Gap rules are in play, especially #2 and #4.

The gap down is so large this morning that it is putting the large gap that starts at 4178.50 into play. As the uptrend from the 7.14 low is now broken, potential is there for weaker prices that may fill this large gap.  Friday’s action added another VPOC above us for a total of two.  This is also a good barometer of tone shift when you start to stack them above us.  Check the list down below for all current VPOCs.

The chart of the day today is a daily /ES with some key areas marked off. Early trade today will have me most interested in the 20sma (green line) and whether or not that brings any support into the market.

VPOC’s 

  • 08.16  4308.25
  • 08.18  4278.00
  • 08.09  4121.50
  • 08.02  4094.25
  • 07.28  4073.50
  • 07.27  3975.00
  • 07.26  3924.25
  • 07.13  3808.00
  • 07.14  3794.25
  • 06.17  3675.50

Scenarios

  • As with any large true gap lower on 100% net short o/n inventory, the first potential move is the fade.  Either buy the high of the first one minute bar or buy the cross back up through the open should the opening drive be lower.  Monitor for continuation and target O/N halfback first, then on to the full gap fill.  As always, judge the success or failure of the fade by how far it goes.  Keep gap rules #2 and #4 firmly in mind.  
  • Any gap and go scenario should be considering the 20sma daily and the top of the gap as support.  Acceptance below both of these levels increases the odds of further weakness.   Failing to hold these levels or rejecting away from them would be short term bullish.    Sustained weakness would be accompanied by very low tick readings that don’t get positive within the first 30 minutes (or later) at all and corresponding weak breadth, A/D, and majority of 11 S&p sectors all below their opens.

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Peter Reznicek

Peter Reznicek is the founder of ShadowTrader.net and writer of Peter's Premarket Perspective, a morning market profile blog to help people plan their trading day and organize their thoughts before the market opens. He can be reached at asktheshadow@shadowtrader.net.

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