The Market ProfileA way of reading the market that recognizes either time spent or volume traded at a particular price level. A market profile can be either made up of “TPO’s” (time price opportunities), or volume. TPO’s measure how much time was spent at a particular price, while volume-based market profiles measure how much volume traded at a particular price. Generally, market profile is used in the trading of futures, especially the /ES. ShadowTrader utilizes volume based profiles. value areas and ShadowTrader Pivots for /ESZ22 and /NQZ22 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.
Pre market indications
| Opening In/Out Balance | in balance |
|---|---|
| Overnight InventoryA way of measuring overnight activity in the futures market by just noting how much of the overnight activity happens to fall above the prior day's settlement value (4:15pm EST close) and how much falls below. If more activity is above the settlement, then overnight inventory is said to be net long. If more is below, then it is said to be net short. If all of the overnight activity is above the settlement, then it is said to be 100% net long. If all of the activity is below the settlement then it is said to be 100% net short. The overnight inventory situation matters most and has the most impact on early trade when it is skewed 100% in either direction because when the imbalance is very large like that then the odds of an early correction increase greatly. This is due to the fact that most... | balanced |
| Current Price/Overnight Range | upper third |
| Shock and AweA term Peter uses to describe what overnight futures traders may be feeling when faced with an open that is wildly divergent from what they expected. Large gaps in either direction that are opening well outside of range are examples of this. The approach is that when the market opens in such a manner, there is often opportunity to trade earlier rather than later because of the large contingent of traders who will be forced to reverse their positions quickly. | no |
| Potential for Early Trade | no |
| Short Term Bias | bearish to neutral, uptrend broken |
Key Levels for Today
| 3967.00 | Bottom of Single PrintsAny section of the market profile distribution that is only one TPO wide. Single prints are a sign of emotional buying or selling as very little time was spent at those levels and thus there is no value there. The endpoints of single print sections are considered to be potential support or resistance points. 12.6 |
|---|---|
| 3912.50 | Swing Low 11.17 |
Ongoing Narrative / Commentary
Classic balancing day yesterday with two way action that failed to move very much. This is why the Key Levels have been cut down to just two main areas that are relevant for today’s trade.
Continue to carry forward the bottom of the single printsAny section of the market profile distribution that is only one TPO wide. Single prints are a sign of emotional buying or selling as very little time was spent at those levels and thus there is no value there. The endpoints of single print sections are considered to be potential support or resistance points. from the 12.6 session as an upside reference and the Swing Low from 11.17 as the downside reference. I often speak in terms of “change” and what levels are the trigger points for that change. In this case the upside reference has the potential to bring in short covering and maybe change the tone to bullish and the downside reference has the potential to end the balance and initiate the next move lower. Either outcome is a change from what is happening currently.
Thank you to everyone who gave feedback on the video idea. Most people love it and a lot of people wanted both, so to that end, I’m giving you both. Scenarios and written out commentary will continue to be posted along with a video version.
VPOC’s
- 09.12 4128.25
- 12.02 4075.25
- 11.08 3835.25
- 11.09 3800.75
Scenarios
- As stated above, it’s either above the single printsAny section of the market profile distribution that is only one TPO wide. Single prints are a sign of emotional buying or selling as very little time was spent at those levels and thus there is no value there. The endpoints of single print sections are considered to be potential support or resistance points. for a rally or below the swing low for continuation lower. Absent a breach of either of these levels, assume further balance and two sided trade.
- Any crossing of either of the Key Levels should be monitored for continuation very closely to ascertain whether or not there is ample momentum and context to keep it going. RejectionPrices are rejected when they move away from a key area quickly in the market profile. For example, let's say that futures open below the value area and start to rise towards it. Upon breaching the low of the value area, they rise just a couple ticks higher and then fall quickly back out of the value area. That's rejection. Rejection is often noted when prices move into "make or break" areas such as an ONH or ONL or prior day's RTH high or low from outside of those areas.
Rejection is the opposite of acceptance. after a cross is a very powerful signal and is often the best location for a hard move in the opposing direction.
Iceberg Tick
A game changer if you use the TICKThe net cumulative tick reading on the NYSE or Nasdaq Composite. This is measured by the number of stocks ticking up minus the number of stocks ticking down at any given moment. It is the least used of the internal indicators but is discussed from time to time. Generally the tick readings are only helpful when they are at extremes such as +1000 on the NYSE to indicate that program trading is ensuing. as a market internal. Paints time spent above zero in green and time below in red. Traders who know how to use the TICKThe net cumulative tick reading on the NYSE or Nasdaq Composite. This is measured by the number of stocks ticking up minus the number of stocks ticking down at any given moment. It is the least used of the internal indicators but is discussed from time to time. Generally the tick readings are only helpful when they are at extremes such as +1000 on the NYSE to indicate that program trading is ensuing. know that this is what really matters in terms of sustaining intraday direction, not how high or low the extremes are.
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