Friday, January 30, 2015

Posted by preznicek at 9:14 AM on Friday, January 30th, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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Futures giving back a large part of yesterday’s short covering rally after getting “long in the hole” at the top of the range. Note where value and POC are and where we closed. We are now opening in balance inside of the VA.

Overnight inventory is almost 100% net short so there could be some early covering if the ONL is not taken out at 1995.25.

The gap is large so approach with caution. Also, when we gap, we are usually opening out of balance. Because the market closed so strong yesterday and our gap is down this is a slightly more ambiguous situation where we are opening in balance. Rather tricky.

Overall, what I believe is happening here is we are getting the erratic action that is typical of a market top. Tops are usually complex, while bottoms are more clean and shaped like a “V”. I believe the market is trying to work it’s way lower. Most Jumbotrons are gapping higher or holding their ranges and yet the broader market is ignoring this. 1981.25 is a double bottom in the futures with another low yesterday at 1982.00. A fourth RTH test of this area should send the market down another 20 points or so to the next support point. This what I think the market is going for right now. It will not do this in a straight line as we see from the action recently but overall I think we’ll get there. Anywhere inside of the overnight range, I think rallies should be shorted.

Watch 2004.00 today as it is VAH. I am thinking ahead that if the market is going to go lower then we shouldn’t find much acceptance today above this area. Value should be at least unchanged if the thesis I presented above is going to work out.

Market Profile Wisdom of the Day
Impulse trading is the stake in the heart for most traders. Price is an advertising mechanism, and advertising is all about stimulating our impulses to do something. Trading based on a single feeling (fear/price) restricts our mental access to all of the more powerful concepts such as excess, balance, and timeframes.

Have a great day,
peter

Thursday, January 29, 2015

Posted by preznicek at 9:00 AM on Thursday, January 29th, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

click to enlarge

click to enlarge

Traders short in the hole a bit in late trade yesterday as the RTH session closed on a spike move lower and settled one tick off of the LOD. A gap up after such a close is exactly what is expected. The question is, of course, what happens once the bell rings…… Read More…

Wednesday, January 28, 2015

Posted by preznicek at 9:20 AM on Wednesday, January 28th, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

click to enlarge

click to enlarge

Overnight inventory almost 100% net long with about a 5.50 point gap currently. ONH is far higher as AAPL reported good news yesterday and sent /NQ’s flying which pulled the /ES’s along with ‘em. I’ve put three things on the chart above that might be important today.

-The downtrendline above in red. Obviously above it is bullish, staying below just continues to build pressure and maintains balance.

-The ONL is right at yesterday’s settlement give or take a few ticks. All settlements are an important reference, doubly so when they have an ONL right at them.

-Yesterday’s low was an excess low and today we are gapping up and holding right at yesterday’s highs. There could be further short covering today which would take the market higher. I will be watching any early weakness closely to see where it holds or doesn’t. If there is an opportunity to fade the morning gap, target the VAH. With the ONH so far above current price, there really is no clear upside play early on unless there is weakness first. As always there is of course the chance that the overnight inventory does not balance at all and the market screams from the open on the gap. This is something to play when the overnight inventory is net short, however, not net long. I’m using caution early on today.

-On top of everything above, we do have an FOMC announcement happening today at 2pm. There could be a tradeable move at some point in the morning but remember that things tend to slow down and get erratic just before lunch and start to get rangebound ahead of the announcement. We expect no change from Yellen and co., but market probably has some fireworks anyways.

Have a great day,
peter

Tuesday, January 27, 2015

Posted by preznicek at 9:01 AM on Tuesday, January 27th, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

Boring overnight session thus far with a minor gap down of about 25 handles on weaker than expected durable goods orders.

Gap rules are in play:
1. Go with all gaps that do not fill immediately (disregard if gap larger than 10 points)
2. Large gaps often do not fill the next day or will fill partially.
3. If the gap fills and value cannot get to at least unchanged, expect a late day sell off (note: consider a touch of prior day’s low as filled)
4. You’ll be better off passing completely on any gap that is very large. Trade later rather than earlier. Most large gaps just go sideways all morning or trade very erratically.

Value has been overlapping to down for the last two sessions after a large multi-day move higher. The gap notwithstanding, I believe that’s bullish. The open today is on news, so let’s see if it attracts new sellers or not. Gap or not, if value can get back to touching the recent days then assume bulls are still controlling. Read More…

Monday, January 26, 2015

Posted by preznicek at 9:22 AM on Monday, January 26th, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

click to enlarge

click to enlarge

Huge range in the overnight trade as Greek news pushed futures well off of Friday’s settlement in a knee jerk reactionary move on Sunday night. We have since recovered to just about flat. Overnight inventory is about 95% net short. Even though we have recovered a bit, I am thinking people are still short, not only from overnight but also from Friday. Note how Friday’s close was at the low of the day but value and the POC are so much higher. Just after the close I tweeted that this would be the type of day to have confidence to go out long overnight if the days range was closer to the bottom of a recent swing. So even if you believe that all the overnight players have reversed their shorts, there is still the issue of the RTH ones from Friday. And there’s many more of them in terms of size.

I will be watching the open closely today. As is usual when we are looking at an opening situation like this the best case scenario is lower first, fail to take out the overnight low, then trade back up through the open and get long. There is the issue of the ONH at 2046.75. A less aggressive game plan would be to see if this level can be taken and then play long into the VAL and/or POC.

Overall, whenever I see large overnight moves get reversed like that I believe that it’s a sign of strength in the market. As I said in a recent post, up at the top of this range the market is trading like sellers are the nervous ones.

Have a wonderful day,
peter

Friday, January 23, 2015

Posted by preznicek at 9:02 AM on Friday, January 23rd, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

Large follow through yesterday on early bullishness off of ECB easing. The market is now well above the downtrendline we’ve been discussing, thus the tone is shifted back to bullish.

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Profile is split into two distributions yesterday with a large spike (single prints) in between. I’m noting how the ONL did not penetrate very far into the spike. When something is supposed to happen but doesn’t carry that information forward. This tells me that longs are not nervous, shorts are. The ONL at 2052.75 is our downside reference today. If it breaks, the natural target would be further liquidation to the base of the spike at 2046.75. The ONH is at 2062.50 and is the upside reference this morning as there is no other RTH point that is important above.

As yesterday was more or less a trending day, watch 2036.50 as well as a reference point. It’s the afternoon pullback low. (see “mp wisdom” below)

Overnight inventory is very balanced with futures down 2 as of this writing. I would let things shake out a bit before picking a spot in early trade. Think of the market as being in balance in relation to the settlement.

Market Profile Wisdom of the Day
Use rally highs and pullback lows as important behavioral references.

Have a great day,
peter

January 22, 2015

Posted by preznicek at 8:11 AM on Thursday, January 22nd, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

click to enlarge

click to enlarge

The value area broke away from the other sessions for the first day in a few yesterday, indicating some stronger buyers. Yesterday’s action also took us right up to the descending trendline in the SPX shown in yesterday’s blog which offered very little resistance. This line will be broken today at the open as futures are up about 12 currently on talk of QE from the ECB. This changes the bias on the daily charts back to bullish. Read More…

January 21, 2015

Posted by preznicek at 8:24 AM on Wednesday, January 21st, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

The market is currently in balance and in the area shown in the chart below….

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The resistance is above at the diagonal down trending line, the support is below at the nearly equal lows. Anything in between is noise. I would not place a directional bet longer than the day timeframe until this pattern is resolved in either direction.

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Profile not giving too many clues as to which way market wants to go right now, either. Overnight inventory is balanced with futures down about 5.50 currently. There was a bit of excess on both ends of the distribution as well. Overall, the market is in balance for now. Responsive trade is the order of the day. I would be looking at value area extremes today for bounces.

I’m also noting that on this current slow grind upwards, retracing the recent large down move, we’ve had nothing but overlapping value to the upside. Confidence seems low.

Have a great day,
peter

Tuesday, January 20, 2015

Posted by preznicek at 9:03 AM on Tuesday, January 20th, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

click to enlarge

click to enlarge

I’ll keep it short here because I’m on the squawkbox for Brad all day today and will discuss profile in detail in my premarket show in 15 minutes. Tune in live on thinkorswim platform under support chat window, shadowtrader room.

I don’t put too much stock in the shortened session of yesterday. When equities are closed you often get these half days in the futures. Depending on how you look at it overnight inventory is either really long or balanced. I’m thinking more balanced since I’m looking at it in relation to the 1/16 close.

Again, I’ll call it all live in about 15 minutes on squawk.

Have a great day and see you there….
peter

Friday, January 16, 2015

Posted by preznicek at 9:02 AM on Friday, January 16th, 2015

Good Morning

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

click to enlarge

click to enlarge

I’m purposely just showing the lower end of yesterday’s distribution because I need to show how far overnight trade went to the downside last night and also where the 3 prior lows are that the market is trying to break, so far unsuccessfully. Read More…