Tuesday, April 28, 2015

Posted by preznicek at 8:18 AM on Tuesday, April 28th, 2015

Good Morning

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

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As drawn in the chart above, the action continues to be dominated by the short term money which is excellent for intraday futures traders. You can think of this as an environment where the Top Ten Futures Daytrading Setups are working. Note how the overnight high is right at the TPO POC. Yesterday’s RTH took out the ONH by two ticks to notch a new all time high on lack of meaningful excess.

There are single prints separating two distributions yesterday. That’s the higher of the two small boxes. Treat them as separate days.

Value was overlapping to down yesterday. The volume POC migrated quite lower but on a double distribution day. Overall, I give the bears a 6.5 out of 10.

Overnight inventory looks about 85% net short. ONL took out the RTH low and is trading below currently. A valid trade setup is the reentry back into the prior day’s range. Context is key, of course, but think ahead in those terms as just one of multiple scenarios that may present itself today.

Overall, I see yesterday’s failure after taking out an ONH by a couple ticks as a liquidation break, rather than the more potent combination of old and new business. People just got overly long. Beyond that, remember that an FOMC meeting starts today with an announcement tomorrow at 2pm EST. Traders may start to position themselves ahead of this between today and tomorrow.

Have a nice day,
peter

Market Profile Blog – April 27, 2015

Posted by preznicek at 9:07 AM on Monday, April 27th, 2015

Good Morning

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

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New all time highs again on overnight inventory that is pretty balanced. Futures currently gapping about 4.50 as of 8:53am EST.

Friday’s settlement is same as TPO POC and is pretty wide there as we had a balanced distribution on that day that hung out in the upper area of Thursday. Think of this as balance.

I think ahead of AAPL earnings tonight there is little case to be made for any bearish moves and if the report is favorable, expect futures higher tomorrow.

VA is compact, thus use caution at it’s extremes. Friday was an inside day of balance which was bullish.

In the video this weekend, I touched upon a relatively new concept that James Dalton has been speaking about a lot recently, that being that when the market advances from a very visual reference point, the support there is weak. Note how the pullback on Friday was right down to the prior high at the 2106 area. This has been resistance for awhile and is now support but note that it’s a very “obvious”, visual, mechanical reference that daytraders, technicians, and other short term traders use. They are correct to use these points because they work, but their support is weak when retested because nobody of a longer timeframe buys that way. That 2106 is our downside reference today and should also be carried forward for a later date if and when it is retested.

In next week’s video I’m going to be addressing the concept of narrow leadership which is typical at the end of a bull run. Remember that the market will not ring a bell at the top or serve it up to us on a platter. If you missed my discussion on the rallies from the weak areas in yesterday’s video, I’ve posted it below.

Have a great day,
peter

Market Profile Blog – Friday, April 24, 2015

Posted by preznicek at 9:16 AM on Friday, April 24th, 2015

Good Morning

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

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The pressure build below the resistance point broke yesterday and we saw the S&P move to within inches of new all time highs. Other major averages made higher highs.

Overnight action very balanced around the settlement and all within yesterday’s value area which had an expansion of range to the upside.

Yesterday was a double distribution day which is poor structure. Am also noting that the volume POC didn’t migrate higher with price. That volume POC is one tick above the settlement and as such is an area to watch today. (2107.00 and 2107.25).

2103.75 to 2105.50 is the spike that separates the two distributions. The top and base of a spike is always a reference point to watch for a potential turn.

Nasdaq futures are much stronger than S&P’s this morning on the heels of AMZN and GOOGL earnings. Might be some push/pull there if things get out of sync.

Have a great day,
peter

Market Profile Blog – Thursday, April 23, 2015

Posted by preznicek at 9:05 AM on Thursday, April 23rd, 2015

Good Morning

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

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Resistance continues to loom above. The market continues to build pressure (and probably get itself longer and longer) up in the 2090 – 2110 area in the futures.

Overnight action is completely contained within yesterday’s range.

AS of now we would be opening within balance and down about 5.25 points. Overnight inventory is close to 100% net short. Any fades would be targeting the POC at 2101.25.

Structure continues to be relatively poor with low volume.

Am noting that halfback is exactly at VAL today. That level is at 2093.75 and may be in play this morning.

Yesterday’s RTH high took out the previous day’s high by one tick. Mechanical trades such as selling against these very visual reference points is a sign of day timeframe traders at work. All moves that initiate from such points are suspect and generally weak.

Have a great day,
peter

Market Profile Blog – Tuesday, April 21, 2015

Posted by preznicek at 9:13 AM on Tuesday, April 21st, 2015

Good Morning

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

The advance continues, making my weekend assessment of moving down to the 2060 trendline less and less likely. Hate it when that happens. Doesn’t this market know I do a video for 4,000 people every weekend? Doesn’t matter, I’m not short anything but a bunch of puts so I’m cool with it.

Meanwhile in /ES land…….

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We are currently gapping up 10.75. Right at the edge of what I consider a large gap. Gap rules are in play as usual.

The most important thing to note is the ONH which is right at the same spot as the double top poor high of 4/15 and 4/16. This is the obvious and visual upside reference. This door has been knocked on three times now. Those highs need repair as well….

Overnight inventory is close to 100% net long today. Yesterday we had 100% net long overnight inventory and we got no fade whatsoever as internals were very strong. The odds of that occurring twice in a row are not so hot. If you use good discipline and have a concrete plan and follow it you can pretty much fade any gap (even if you shouldn’t be doing it) and not get hurt too badly. The trick is to find entry points where the structural or technical stop is close by. If you just “guess and hope” then you’re probably going to get run over even if its a good gap. Yesterday was a perfect example of this. I shorted the retest of the overnight range early as we came back into it. We dropped about 6 ticks to my first target whereupon I closed half the position. The stop was then moved one tick above the ONH and the rest is history. I was wrong, still made some lunch money and was able to move on to other trades with a clear head. If I didn’t know about the re-entry through the ONH, I might have shorted later and been caught at the low of the day.

Structure was poor to the upside but apparently people are still rather short. If they weren’t there would not be large opening gaps. Like yesterday, I have no idea what the news is as I’m writing this. I’m sure there might be something but it does not help me one iota knowing it. People often need reasons for things to rationalize their poor trading decisions and the media does an excellent job providing that outlet for them.

Classic “p” formation in yesterday’s distribution. Indicative of short covering rather than new money buyers who have longer term aspirations.

One setup that is often overlooked is the possibility that we break out through that aforementioned double top and fail back inside. If so, pay attention, that’s probably a good short signal with a stop over the high of today. That setup is powerful when it happens on any timeframe.

Have a wonderful day,
peter

market profile blog – Monday April 20, 2015

Posted by preznicek at 9:04 AM on Monday, April 20th, 2015

Good Morning!

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

The technicals of the market are always the starting point. The profile comes in after and fills in the blanks of what we don’t know that exists under the surface….

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The hourly shows the downtrend line in purple. Does the market break here today or not? Remaining underneath keeps things bearish, moving back above changes the tone.

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Futures gapping up about 10 currently. Gap rules are in play. Overnight inventory is 100% net long so a fade move could be in play with the caveat that the gap is large. That being said, it’s not one of those that are gapping up and out of range so I would expect at least some backing and filling this morning if the ONH cannot be taken out. As always, context will determine what happens.

Overall, I am rather split as to what will happen in today’s session. I am assuming there was news before the 6pm EST futures open last night because they gapped immediately on open. Frankly I could care less what it was. Shorts got scared, stops got triggered and we are higher. Is there opportunity now? That’s the only question. Early market internals reads will definitely be a tell. There was good excess on Friday’s low so don’t be surprised if that was it to the downside. In my video yesterday I saw the path of least resistance to be somewhat lower, but the market is definitely not influenced by the ShadowTrader Video Weekly. It’s below if you missed it…….

have a nice day,
-p

market profile blog – Friday April 17, 2015

Posted by preznicek at 9:26 AM on Friday, April 17th, 2015

Good Morning!

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

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I’ve started to switch my game up a bit to anticipate gaps rather than be forced to react to them when the bell rings. I trade pretty heavily in SPX options (do NOT ask me what this strategy is) which entails a matrix of longs and shorts. To make a long story short (or rather a short story long), I bought back a number short puts yesterday just before the close at a very small loss of about .10c per contract because I noted that the profiles had back to back poor highs. These of course have strong odds of backing off as they tell us that a preponderance of short term traders have gotten themselves overly long and are need to get paid for it quickly or they are going to liquidate. Remember that when the profile references are back to back their import is exponential. Of course morning headlines will tell you that “Chinese Regulators Are Now Allowing Short Selling by Fund Managers” but it’s the underlying structure that makes such headlines take the market lower. There’s always a reason, there has to be or financial media wouldn’t exist. If there isn’t, they’ll create one. I feel extremely calm, clear, and in control this morning.

As the market rallied the last two days, the POC’s never migrated higher at all. That’s also a tell that buyers are weak. The market advanced a bit in price but value was unchanged.

The gap is double digits, gap rules apply, and for me the trade is probably later rather than earlier. Brad and I recently did a segment on ShadowTrader Uncovered on the gap rules. You can check it out below:

Have a great day,
peter

Market Profile Blog – Thursday, April 16, 2015

Posted by preznicek at 8:13 AM on Thursday, April 16th, 2015

Good Morning!

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

Overnight action has filled the gap between Tuesday and Wednesday. Yesterday’s poor high combined with the failure to hold above the trendline in the cash market is probably the catalyst for futures being down about 8 as of this writing. Below is a graphic of the SPX daily showing the failure at the trendline.

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There’s not a lot to say other than that confidence remains low. No upward or downward move seems to attract longer term traders who would have more conviction.

Yesterday’s high is poor at 2105.50.

Overnight inventory is relatively balanced even with futures off a decent clip. A fade can always occur but remember that the best scenario for one is when overnight inventory is skewed 100% in one direction.

Overall the tone remains the same. Lack of conviction and shorter timeframes dominating results in quickly overbought and oversold conditions which correct very quickly. Trade accordingly.

Have a great day,
peter

market profile blog – Wednesday, April 15, 2015

Posted by preznicek at 9:15 AM on Wednesday, April 15th, 2015

Good Morning!

Value areas and POC figures for /ESM5 and /NQM5 are posted free every morning HERE.

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As I get deeper and deeper into the profile I’m less and less surprised by the constant back and forth action of the market. Being a short term trader certainly has its advantages as there are often long periods like this where the market effectually goes nowhere but at the same time goes somewhere every day.

Yesterday’s high was just shy of the overnight high. Both of these highs were essentially right to the single prints that divide Monday’s two distributions. As such this area is weak so I’m not surprised that it was taken out in overnight trade. Futures are now +8.00 and moving higher. Gap rules apply and the gap is currently “just right” (like Goldilocks).

1. Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher.
2. Large gaps (this is not really one) may not fill or may fill only partially on the first day. Pay attention to “halfback” of the gap distance.
3. If the gap fills (defined by moving back down to yesterday’s HIGH) and value cannot get to at least overlapping, there will probably be a late day rally.
4. Gaps of 10 points or more tend to be very difficult to daytrade. They often will just go sideways in erratic action to “digest” the overnight move. My experience has led me to abandon trading these gaps.

Point 3 above is one I just discussed with James Dalton on the phone last evening. In his rules he always calls the value “unchanged”. We both agreed that overlapping is more accurate.

The structure beneath us continues to be rather weak and yesterday’s TPO POC was sort of prominent. I would not be surprised at all to see a retest of that area at 2088.25. That of course would be a “stage” further on down the line. If there is a gap fill, you would of course target yesterday’s high first, then VAH, then the volume POC, and then the TPO POC.

Speaking of James Dalton, he is taking signups for his 2015 intensive. If you enjoy this blog and are not familiar with his material, I highly suggest you attend. I receive no compensation for signups, I’m just a believer in the methodology. Check it out HERE

Have a wonderful day,
peter