Wednesday, July 1, 2015

Posted by preznicek at 9:13 AM on Wednesday, July 1st, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

On yesterday’s ShadowTrader Uncovered show on tastytrade, I made a number of comments saying that there were decent odds that the next move could be up rather than down. As we are currently gapping +16, this may be the case. Either way, it’s important to note that down then sideways does not automatically mean down further.

Yesterday’s failure to hold a two day low (crossing below Monday’s low and quickly coming back into range) may have been the catalyst that just got too many people short at the wrong time which is what is causing the gap up today. Of course the media will give you some Greek or Iranian (or Yellenian) reason but it’s not really what is causing prices to move.

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Overnight inventory is 100% net long. As such, the usual chance for a fade is in play if the ONH at 2077.50 fails to get taken out in early trade. Gap rules are in play.

Currently we are opening up out of balance but within the range of Monday’s large downdraft. Note how all this action back upwards is “repairing” the anomalies that were present in that day’s distribution. Of course this needs to happen within an RTH session, but note how yesterday’s trade repaired a good bit of it and today’s large gap may do the rest.

The gap above us between 2083.25 and 2086.25 is still there and still in need of filling. A strong market would target this area to resolve that gap.

Both of the last two days of trade are lacking meaningful excess. Yesterday’s trade had two ticks and Monday had one. Remember that poor lows indicate markets that have gotten too short and are covering. Carry those lows forward.

Have a great day,
peter

Tuesday, July 30, 2015

Posted by preznicek at 9:14 AM on Tuesday, June 30th, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

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Trending day down yesterday with the usual conflicting news from the profile that characterize yesterday as more news driven panic selling rather than longer term action. This cannot be completely ever known so we just have to analyze the facts and be VERY careful not to try and let our bias influence us….

The bearish case:
-Very large expansion of range, the largest in some time.
-The gap held with minimal filling. The ONH was taken out but the market was not even able to reach Friday’s low before reversing back downwards.
-Market internals very bearish with A/D lines moving south the entire day and ending up well below -2000 on both NYSE and Nasdaq exchanges
-Recent lows from April, May, and June at the low 2070′s area were taken out and market closed well below all of them.

The not so bearish case:
-Note that I didn’t call it “the bullish case”, that would only be appropriate later if we were able to take back this entire move, perhaps.
-Profile very stretchy and not very wide
-Many anomalies in the distribution, I’ve circled them in blue
-Single prints as well which are the black squares
-Overall volume in futures pretty strong but not so much in NYSE
-Move driven very suddenly on weekend news with market falling out of sideways pattern. Just the fact that it’s news makes me often doubt it’s staying power. For stocks to continue to fall, their holders en masse must feel either that greater return lies elsewhere or that the risk of holding them long term is not worth it’s reward. I’m not sure yet that this is the case out there.

Currently the gap up is +15.50. The RTH action is what matters in terms of whether the gap makes shorts nervous or not. Overnight inventory is close to 100% net long, with an ONH at 2069.00 which is the first upside reference. VAH at 2071.50 (which is also a single print) is the second upside reference. Above that I would watch 2075.00 closely as well as it is yesterday’s opening price.

There are two ticks of excess on yesterday’s low but with a lot of single prints down there coupled with just one other column of TPO’s it could be argued that the whole move below 2053.50 is excess which should be paid attention to. As with any day that follows a range expansion (and really every day regardless), it’s going to be all about where value develops in relation to yesterday’s range.

On a closing note, one thing that I find very interesting coming into today is the fact that Greece already confirmed that they will not be making the payment to the IMF that is due today. So they are officially now in arrears and the fear that they would be which is what sparked the Sunday night gap down after the Greek P.M. walked away from negotiations on Friday evening, has now become reality and yet we are gapping up quite a bit. This is the concept that I often discuss with Brad on our tastytrade show, that YES, news does matter but it cannot continue to move markets if the inventory situation is too far out of balance.

Have a great day,
peter

Market Profile Blog – Monday, June 29, 2015

Posted by preznicek at 9:11 AM on Monday, June 29th, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

Greece is the word, and then some. Ahead of the 6pm (their time) deadline on Tuesday for their payment to the IMF of about 1.75B, Greece has shuttered its banks for six days causing a little bit of panic out there which has spread over to our shores with a large gap down upon the Sunday evening open of the futures. Currently down 21.50, that’s relatively benign compared to the overnight low of 2054 which put us down about double that.

As always, gap rules apply with the most important one being that going with (directional play in the direction of the gap) is very difficult on most gaps larger than 10 points. This one certainly falls into that category. I am inclined to think that this gap may fill at least partially early as if the market was to open right here, it would open the SPX cash very close to trendline support at the 2080 area. Check out the chart below…

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As for the profile and the futures market, suffice it to say that overnight inventory is definitely 100% net short. The ONH at 2079.00 is more than likely a trigger point to go long for a fill of at least some portion of the gap. Note that I’ve annotated 2086.25 as the prior RTH low which would be the first target for any fade move inside of that gap. If that gets taken, the as always, target the rest in stages starting with VAL, then POC, and moving up accordingly.

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Given the severity of the gap and the fact that we will probably open the cash market close to a support level, if we don’t get any counter move early or at all, carry that information forward as a sign of weakness in the market. That would indicate acceptance of prices at these levels and establish value quite lower than last week.

Have a nice day,
peter

Market Profile Blog – Friday, June 26, 2015

Posted by preznicek at 9:06 AM on Friday, June 26th, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

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Value is overlapping to down and overnight trade explored a bit below yesterday’s RTH low. Overnight inventory is rather balanced so I don’t see any clear setup for the fade.

If you look closely at the graphic above you’ll note the two double bottom areas that I mentioned yesterday in the blog. Currently, in this overnight session we are trading a couple ticks above the lower double bottom and a few ticks below the higher one. The higher one is at 2099.00 and is the area that sellers need to keep prices below today without finding any acceptance above it if the recent more bearish tone is to continue.

I am noting coming into this session that Nasdaq 100 futures (/NQ) are divergent from S&P (/ES). This usually carries over into the RTH session and doesn’t bode well for directional trade.

Have a great day,
peter

Market Profile Blog – Thursday, June 25, 2015

Posted by preznicek at 8:32 AM on Thursday, June 25th, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

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Yesterday’s trade was a break below the double bottom of 6/22 – 6/23 on poor structure with a close at the lows. It was a double distribution with anomalies on low volume. As such, I am not surprised that overnight trade failed to take out yesterday’s RTH low and instead traveled the length of yesterday’s VA which was relatively large. Read More…

Market Profile Blog – Wednesday, June 24, 2015

Posted by preznicek at 9:17 AM on Wednesday, June 24th, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

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I’m short on time here and off to a late start this morning, so I’ll keep my comments brief.

Market clearly in balance over last two sessions. Read More…

Market Profile Blog – Tuesday, June 23, 2015

Posted by preznicek at 9:02 AM on Tuesday, June 23rd, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

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Market feels rather heavy to me here with yesterday’s low volume advance struggling near the all time highs. While all auctions remain up, risk for new longs here is higher.

A rather balanced profile yesterday with overnight inventory all inside the RTH range. As of now we are trading right at the TPO POC and thus very much in balance. Balance rules apply. Read More…

Market Profile Blog – Monday, June 22, 2015

Posted by preznicek at 9:06 AM on Monday, June 22nd, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

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Late day selling often doesn’t bode well for bears and this morning is no exception. On Friday we saw markets come off strongly into the close while value remained much higher. Optimism over Greece being “resolved” (as if debts can just magically vanish, try that with your credit card company next month) is all that’s needed to send shorts scurrying like roaches. That caused one of those Sunday evening gaps of about 9 handles which is now +13.50.

Overnight inventory is obviously 100% net long as not a smidgen of it is below the settlement. Not possible to be with an overnight gap.

Currently trading at 2111.25, as of this writing, we are just inside Friday VA. Overnight action was not able to take out Thursday’s new swing high.

Overall, the tone is more bullish than bearish as I alluded to in my weekly video which is below if you missed it. While Friday didn’t seem to do much, note that it did repair the poor structure of Thursday and established some price acceptance above the recent downtrend line.

I am noting that Thurs-Fri RTH sessions were a double bottom with lows only one tick apart. This is definitely the downside reference, as is the ONL at 2097.25 since there is a gap below it. Only acceptance below those matching lows would change the tone here. Assume bullish if not.

Brad has the day off today and I am on Squawk starting in about 15 minutes. Tune in on the thinkorswim platform, support chat tab, shadowtrader room. Once there, click “Watch” and you’ll have a front row seat……….

Have a nice day,
peter

Market Profile Blog – Friday, June 19, 2015

Posted by preznicek at 8:37 PM on Thursday, June 18th, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

**I will be traveling on the morning of the 20th, so thus am sending out a short post on Thursday evening. I will not be able to post or tweet tomorrow premarket.**

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Keep the technicals in mind, they are more important than the profile. Yesterday’s action took the S&P 500 well over its downtrend line while the Nasdaq Composite notched a new all time high (over the 2000 high) and the Russell 2000 did as well. There are simply no serious sellers out there at all. We’ve had a number of 100% retracements recently which have resolved to the upside. As such, the odds don’t favor another retest of recent lows. Pullbacks should probably be bought.

All that being said, structure was poor again as usual. The letter “p” is what you see, and short covering is what it be. Rapping is my dream job, I just do this because it pays well.

I didn’t draw the usual boxes but note that the distribution can be broken up into 3 areas with a ton of singles all in between. Action was simply forced higher and probably a lot of buy stops triggered. Nobody believes it until it’s too late, that is basically how the market has been acting for quite awhile now.

Watch where value develops today, that will be important. It always is, but especially when you’ve recently broken out of a pattern.

Have a nice day and call Brad on the tastytrade show at 855-238-2789 at 2:30pm. He’ll probably be lonely without me in the ‘sidecar’ and will need some cheering up.

your humble narrator…….
Peter

Market Profile Blog – Thursday, June 18, 2015

Posted by preznicek at 8:47 AM on Thursday, June 18th, 2015

Good Morning

Value areas and POC figures for /ESU5 and /NQU5 are posted free every morning HERE.

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Post Fed gyrations leaving futures higher this morning by about 7 currently.

Overnight inventory is very balanced with close to equal action on either side of yesterday’s settlement. As of now we would be opening above the VAH but within yesterday’s range. I would hold yesterday’s RTH high as the upside reference at 2098.75. Read More…