Friday, December 19, 2014

Posted by preznicek at 9:22 AM on Friday, December 19th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

On a non continuous contract basis the /ESH5 took out it’s all time high. This contract is “young” however and thus trades at such a discount to the SPX that there is that delta of about $7. The real all time high in the futures should be considered as 2079.00. That’s the one you would see on a composite profile where you just use /ES_F. I like to set my profiles to the front month future only.

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Are traders “long in the hole” here? It looks like it but something has me thinking that the shock and awe that those short must probably still feel (and there are people still short) will trump that. That being said, overnight inventory is almost 100% net long and there is a large spike of single prints in the late day action. The setup is there for a liquidation break but with futures up 6.00 currently and failing to penetrate into yesterday’s RTH range with any conviction overnight, it doesn’t bode well for those of the ursine persuasion. Note how the ONL is at 2058.25 and yet there are more single prints below that down to 2056.75. Why didn’t the futures find support a bit lower where there was at least two TPO’s wide of value? The answer is because people are still short.

The market is currently trading in the balance area of approximately 11/20 to 12/5. With the move over the last 1.5 days, some balance here would be healthy and is what I would expect. While I’m ready for any scenario, the tone thus far feels like traders are supporting this upswing and will continue to do so. Whenever a news event catches a lot of people by surprise I tend to feel that it will be very difficult for the market to return to the “pre-surprise” level. That’s usually just how things work.

Market Profile Wisdom of the Day
Emotional capital is more important that financial capital.

have a great day,
peter

Thursday, December 18, 2014

Posted by preznicek at 9:18 AM on Thursday, December 18th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

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Futures up 26. Go figure. I’ll leave it at that today. When its Fed related, I don’t know any more than any of you. Regular commentary will resume tomorrow.

Have a great day
peter

Wednesday, December 17, 2014

Posted by preznicek at 9:11 AM on Wednesday, December 17th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

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Volatility continues with large gaps each morning. This is the norm in a VIX 20 environment as opposed to a VIX 11 environment. Read More…

Tuesday, December 16, 2014

Posted by preznicek at 8:36 AM on Tuesday, December 16th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

Futures down on a double digit gap. Gap rules apply. Overnight low thus far was much lower so we are seeing some recovery off of most bearish levels. Read More…

Monday, December 15, 2014

Posted by preznicek at 9:12 AM on Monday, December 15th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

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Gapping up 13 thus far. Overnight action has breached into Friday’s VA by a few handles. We are currently trading inside Friday’s range but below VAL. The overnight session did go a few ticks below the RTH low. I tend to note that as a sign of a weaker market.

Note the large spike that formed at the end of the day. There are obviously a few traders who joined the party late and are “short in the hole” or we wouldn’t be gapping up as much as we are right now. Obviously, the RTH session is the only thing that matters and where it closes. What we’re seeing thus far is short covering on those late day sellers.

For what it’s worth, this is a gap that I would fade if it were smaller. The spike that goes from the low on up to 2004.50 is all single prints so it’s natural that it wouldn’t resist much on the way back up during an inventory rebalancing which is what we’re getting right now.

As always, bears need to continue to build value lower to maintain trend.

**I’m on the squawkbox for Brad all day today….come join us. Thinkorswim platform, support/chat tab, ShadowTrader room.**

Have a great day
peter

Friday, December, 12, 2014

Posted by preznicek at 8:49 AM on Friday, December 12th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

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Confidence is low, the market is in the throes of short term traders batting it around, getting too short, covering too much, then selling it off again. Opportunities abound in this type of market for the informed and aware.

12/10′s RTH and Overnight sessions double bottomed and we have now breached that area in the premarket sitting on a double digit gap of about 8.50 to the downside. Overnight inventory is almost 100% net short so I would place the odds of early follow through to the downside as lower. Gap rules apply.

I believe that double bottom low is key to this morning’s action. Already we are seeing futures flirt with that level now after rallying a good clip off of the ONL. Any movement above 2023.25 could bring in a short covering rally at least to yesterday’s settle.

A lot of the recent action was discussed by James Dalton/Julia Stewart in a webinar which aired yesterday. I urge everyone to check it out if they haven’t already. A link is below which you can cut and paste into your browser.

https://yd147.infusionsoft.com/app/linkClick/8879/9062377c0b5614c0/534521/7acb3868bb745b8c

have a great day,
Peter

Thursday, December 11, 2014

Posted by preznicek at 9:11 AM on Thursday, December 11th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

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Gap up of about 8.50 as of this writing. Goldilocks type gap which could be faded if the ONH is not taken out early and given the proper context of not too bullish internals. Watch how the TICK acts early, that will be the clue. A tick that opens firmly positive and stubbornly refuses to budge back down below zero indicates a gap that is probably not going to fill much.

The ONH went right to the base of the spike as seen in the graphic above. This is a good visual reference to get long if the spike is breached. You would more than likely travel to the other end of the spike very easily as there will be little resistance there. Interestingly enough, half-back is right in the middle of the spike.

The ONL failed to take out the RTH low and has formed a double bottom so there is a reference point there as well. Yesterday’s low was poor so a breach there would set up a short trade for some movement below yesterday’s low and targeting the prior highs in the SPX at 2019.26 (9/19) and 2011.17 (9/4).

There are some anomalies (flat right edges) in the lower distribution. These happen when more emotional buying and selling is ruling the auction. Think of them as “non-professional”.

Value established overlapping to down yesterday which is not as bearish as one would expect. Yesterday’s profile is a double distribution; acceptance within the lower area keeps things status quo of a downward trend, acceptance in the upper distribution may change the tone. Note how thus far overnight action has failed to rally into the upper distribution.

NOTE: ShadowTrader always trades the old contract on the Thursday of rollover and switches to the new one (H5) the next day. Tomorrow’s value areas and pivots will be calculated off of what the H5 contract did today. Today I am talking about the /ESZ4 and Brad will be as well during his show.

Market Profile Wisdom of the Day
There is risk of seeing inventory corrections as something more.

Have a great day,
peter

Wednesday, December 10, 2014

Posted by preznicek at 8:09 AM on Wednesday, December 10th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

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Yesterday’s tone was bullish from early on but value still developed lower and did not “pierce” into the prior day’s VA. Read More…

Tuesday, December 9, 2014

Posted by preznicek at 8:30 AM on Tuesday, December 9th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

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Double digit gap down this morning following on from yesterday’s weakness. Futures are now well below the low of 12/1 which was a swing low. This is the first time in awhile that we’ve seen futures actually make a lower low on the daily chart.

Overnight inventory is very short but not 100% so. Gap rules apply, not the least of which is the “Reznicek Caveat” which is that double digit ones are difficult to trade in either direction and are better off left alone in early trade. A tradeable situation will often develop later.

Yesterday’s profile was a double distribution. Let’s see if futures can get up to at least the lower of the two distributions. If we can’t get back into range at all, then value could establish lower in a breakaway manner which would be more bearish.

With yesterday’s break and today’s follow through, if we stay weak the market has clear sailing to the downside to 2011 which is the prior high where we broke out in early November. Noone can say for sure if this will be the next move but technically speaking, that is now the path of least resistance.

Have a great day,
Peter

Monday, December 8, 2014

Posted by preznicek at 9:10 AM on Monday, December 8th, 2014

Good Morning

Value areas and POC figures for /ESU4 and /NQU4 are posted free every morning HERE.

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Opening out of balance below Friday’s RTH low. The ONH was not able to take out the all time high of Friday’s RTH. Read More…