July 31, 2014

Posted by preznicek at 9:04 AM on Thursday, July 31st, 2014

Good Morning

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

Click to Enlarge

Click to Enlarge

Overnight inventory is 100% net short on a very large gap down. Thus the early trade could be a fade against the tide, however, remember that gaps larger than 10 points are much more difficult to navigate. No shame in just letting things shake out a bit before trading today.

With prices opening well out of balance on such a large gap, I think more about the technicals on a daily chart rather than the profile.

click to enlarge

click to enlarge

The daily futures chart has some support below but as you can see it’s not coming in until about 10 points lower from here. Some consolidation today could set the market up for a move to those areas around 1940.

Market Profile Wisdom of the Day
The harder you look for trades, they’re probably not there.

Have a great day,
peter

July 30, 2014

Posted by preznicek at 9:10 AM on Wednesday, July 30th, 2014

Good Morning

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

Click to Enlarge

Click to Enlarge

–The first thing that comes out to me looking at these distributions is that we are definitely in a large balance area. Liquidation breaks are coming left and right but with the market digesting them quickly, value is little changed.

–Overnight trade is all contained within the VA. Again, balance. Balance leads to excess however and with an FOMC announcement today at 2pm EST, that could be the catalyst to push us out in either direction.

–Overnight inventory is 100% net long with a gap of +8.50 currently which is a nice sweet spot for a fade trade. On just such a downside setup, I would be targeting 1967.00 as it is the top of the spike of single prints that form the bottom of yesterday’s distribution.

Market Profile Wisdom of the Day
Start every day’s analysis with the high and low of the overnight session. Also, discerning if overnight inventory is long (above prior day’s settlement) or short (below prior day’s settlement). Those people are the “old business” and that gets taken care of first, often rebalancing early.

Have a great day,
peter

July 29, 2014

Posted by preznicek at 9:05 AM on Tuesday, July 29th, 2014

Good Morning

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

Click to Enlarge

Click to Enlarge

Much like yesterday’s open overnight inventory is balanced to slightly net short.

The value area is rather large, as such extremes could be in play. As of now we are opening just on the upper edge of balance so the early play is to see if the market can stay out of it.

Yesterday’s high is poor as was the prior day’s RTH session. In fact, if you look the last five distributions they all had poor highs. All of this is in need of repair.

The ONH is the same as the 7/25 RTH high and is the upside reference if we rally. A retest of that area probably opens the market up to further gains.

Market Profile Wisdom of the Day
If you open out of balance and then fail to go further out of balance, there is a large opportunity to return to the POC, thus you should trade early that day with defined risk and use the prior day’s high or low as a beginning reference point for your trade.


peter

July 28, 2014

Posted by preznicek at 9:15 AM on Monday, July 28th, 2014

Good Morning

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

click to enlarge

click to enlarge

I left the office very early on Friday so I did not see any trading action past about 10:45am. Obviously seeing it now we sold off a decent bit and value “broke away” and established lower. That being said, note that there was basically no extension of the value area or range downward. The value area is rather squat. I don’t give much weight to that kind of selling.

Overnight inventory is balanced to slightly net short and futures are up about $2 as of this writing. When the inventory is not skewed to one side there is little opportunity for the early move.

Because there is a gap, Friday’s RTH high at 1977.50 is of note. Anything above that and there is a possible gap fill.

The fact that the ONL only broke Friday’s low by six ticks and has since rallied well over Friday’s settlement is the key piece of information to start your day with. Longs who are more nervous would be facing a gap down and lower early prices more than likely. The overall mindset of the herd has probably not changed much.

The ONH is one tick below the VAH. A retest there possibly pushes futures out of balance and sets up the aforementioned gap fill. As always context will be the key.

Market Profile Wisdom of the Day
Always ask yourself if the “ruling reason” (the overall mindset of the herd) has changed or not.

Have a great day,
peter

July 25, 2014

Posted by preznicek at 8:42 AM on Friday, July 25th, 2014

Good Morning

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

Click to Enlarge

Click to Enlarge

–We made another all time high yesterday in the S&P but value was only overlapping to higher and the value area was smaller than the prior two sessions. In a rally there should be expansion of range, not contraction. So the market may be “tired out” a bit here. As always where value develops and closes is the key.

–The volume POC has been the same for the last two sessions within one tick. I carry forward stuff like that. In a healthier rally the fairest price to do business should move up with price continually. Is not an overly bearish signal, just something to be noted.

–Overnight inventory is almost 100% net short so be looking for the counter move if the ONL is not taken out. Notice that the ONL is right at the excess low of 7/23 so this is an important reference. The market won’t get lower in the short term unless there is acceptance below that level.

–I believe there is still lack of meaningful excess on the high. There are 3 TPO’s of single prints on the top of yesterday’s distribution but that’s not much.

Market Profile Wisdom of the Day
Markets must take care of current (old) business first. Old business is the closing of positions already open, new business is new buyers or sellers stepping in. I like to assume that when the market opens there is always some old business to be taken care of especially when there is a gap to contend with.

Have a great day,
peter

July 24, 2014

Posted by preznicek at 9:14 AM on Thursday, July 24th, 2014

Good Morning

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

Click to Enlarge

Click to Enlarge

New all time highs again yesterday. Upside reference is 1985.75 at the ONH.

The POC is prominent at 1982.00, failure to take out the ONH increases odds that this POC is retested.

Note how yesterday’s RTH low was right at VAL. Short term traders are still in control of this market.

Value continues to build higher and there was basically no overlap yesterday which is continually bullish. While liquidation breaks are occurring often, they continue to be bought up. Good traders do what works until it doesn’t. Be that guy (or gal).

Market Profile Wisdom of the Day
When “repair” occurs, it then takes that data point of a poor high or poor low out of your narrative.

Have a great day,
peter

July 23, 2014

Posted by preznicek at 9:26 AM on Wednesday, July 23rd, 2014

Good Morning

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

click to enlarge

click to enlarge

Yesterday’s action took out the 7/3 all time high but only by a couple handles and again made a poor high with no excess. I wouldn’t even call the small gain over the all time high much of a repair. I believe the market wants still higher from here today.

The POC yesterday at 1978.50, is prominent and could be revisited.

Wish I had more to tell you but that’s about it. The gap is small enough where you could easily run higher from here on an initial move. Yesterday’s RTH high is the only upside reference at 1980.50.

Market Profile Wisdom of the Day
Large gaps rarely reverse on the first day.

Have a great day,
peter

July 22, 2014

Posted by preznicek at 8:38 AM on Tuesday, July 22nd, 2014

Good Morning

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

click to enlarge

click to enlarge

Downtrend as drawn in by the purple line is now broken, thus path of least resistance in the short term is to the upside.

Overnight inventory is net long. Futures are gapping up about 9 of this writing.

Yesterday’s high was poor and is in need of repair.

The all time high from 7/3 could be in play and is the major upside reference. Remember that we have a double top here in conjunction with the 7/16 high. That with all the recent trade action has created a very large poor high on a composite profile from 7/3 to the present.

Market Profile Wisdom of the Day
Very prominent POC’s have greatest chance of retests. Additional movements higher without visiting prominent POC’s first add risk. Revisiting the POC and then advancing higher is a much lower risk situation.

Have a great day,
peter

July 21, 2014

Posted by preznicek at 9:00 AM on Monday, July 21st, 2014

Good Morning

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

Click to Enlarge

Click to Enlarge

–Overnight inventory is 100% net short, as such the ONL at 1965.50 is your downside reference. Failure to take it early brings in short covering which could target the POC or VAH.

–Friday’s structure was poor with a number of single prints and overall elongation. This is due to the short covering nature of reversing Thursday’s action. I keep this in mind but weight it accordingly as we are in a very bullish environement.

–The ONH is right at Friday’s settlement. Taking it out not only reverses the action of the overnight traders but also makes futures green for the day which may bring in more short covering. I never assume everyone has already covered even if we’ve taken back 95 – 100% of the move. Not all buying is going to be short covering.

–There are a number of single prints in the profile distribution from Friday. Watch the points where they begin and end for possible inflection areas.

Market Profile Wisdom of the Day
“The moment other people’s perception changes is the entry”

Have a profitable day,
peter

July 18, 2014

Posted by preznicek at 9:14 AM on Friday, July 18th, 2014

Good Morning

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

News driven selling slammed markets notably lower yesterday in what seems to be a very large liquidation break. Let’s look at the profile…

Click to enlarge

Click to enlarge

While there was a huge change in price from one day to the next, there was not a huge change in value. Furthermore, note the stretched out nature of the distribution with lots of single prints at the end. Combined with a lack of POC migration downward (the green line of TPO’s), this is not the combination of long liquidation and new shorts initiating that would be characteristic of stronger selling. Let’s look at a closeup of the more bearish portion of the day…

Click to Enlarge

Click to Enlarge

The above picture shows the data values of the number of contracts traded at each price level along the right. Normally these numbers are always 5 digits at each price. Note how many of them are only four digits as little volume traded at those levels. This is what happens in a liquidation break as opposed to older longs selling and new shorts coming in, factions which often sit on the offer to get the price they want.

Futures are well off of overnight lows with inventory that is net short. Not 100% short but net short. As always when overnight trade is happening on both sides of the settlement, I’m prone to trade it later rather than be aggressive right from the open looking for the inventory rebalance. It is also options expiry today. I generally don’t trade futures on these 3rd Friday’s as I have found them to be choppy and full of signals that don’t follow through.

I believe the key level for the bulls today is 1959.50 which is the top of the lowest spike from yesterday. You can see that in the second picture where the TPO’s go from one to two. It’s no coincidence that the ONH is 1958.75.

Market Profile Wisdom of the Day
“Markets that are too short or too long are full of weak hands. Those people start the move as they reverse course.”

Have a great day,
peter