Peter’s Premarket Perspective | Tuesday, April 6, 2021

The Market Profile value areas and ShadowTrader Pivots for /ESM21 and /NQM21 Futures are posted free every morning

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Perfect day to take a wider look at things and make sure that we have all of the recent nuances in our narrative.
– April 1: Closed at HODHigh of Day at top of spikeA set of single prints that are created in the last 30 minute session of the day which form at the top or bottom of a range.
– April 2: Market closed, overnight activity much higher
– April 5: Gap and go with strong close and zero gap fill leaving long line of single printsAny section of the market profile distribution that is only one TPO wide. Single prints are a sign of emotional buying or selling as very little time was spent at those levels and thus there is no value there. The endpoints of single print sections are considered to be potential support or resistance points. (p formation) and VPOCVirgin Point of Control. This is a point of control level that has not yet been tested (traded through) during an RTH session. If the POC gets tested during an overnight session, it does not count and remains "virgin" until it happens during a day session.
– April 6: Overnight activity balancing in a small range and only testing small portion of single printsAny section of the market profile distribution that is only one TPO wide. Single prints are a sign of emotional buying or selling as very little time was spent at those levels and thus there is no value there. The endpoints of single print sections are considered to be potential support or resistance points.

Can you see how looking at things this way tells us so much more about the state of the market? This is a very short term version of the narrative that I speak of constantly. Next comes the harder part which is how you interpret it. Because it can often go either way or sometimes push you into potential scenarios that have low odds of playing out successfully simply because they go against the current ruling reasonA term that may or may not have been coined by James Dalton, our mentor in market profile. It means the current ethos, zeitgeist, feel, tone, essentially "what is happening at this moment". It is that thing that is currently driving the market which can often fly in the face of all analysis and common sense. Can be something as simple as "the market wants to tag this particular psychological level", or more nuanced like underlying Fed policy or heightened sensitivity to news events.. I believe this is just such a time where the nuances are clearly pointing to a very shaky structure that is “piling on” while the reality is that the NDX is waking up from a period of sleep and buyers are engaged with plenty of catalysts to support their activity. That being said, the structural implications discussed above certainly give us plenty to work with in terms of WWSHDWhen What Should Happen Doesn't - A market dynamic where prices defy what is normally expected of them given the specific context they are in. A good example would be filling a larger gap only partially. The thinking is that the failure to do what should happen means prices are potentially headed in the other direction..

Putting the binoculars away for a moment and taking the microscope off the shelf, we are slated to open within range on overnight inventoryA way of measuring overnight activity in the futures market by just noting how much of the overnight activity happens to fall above the prior day's settlement value (4:15pm EST close) and how much falls below. If more activity is above the settlement, then overnight inventory is said to be net long. If more is below, then it is said to be net short. If all of the overnight activity is above the settlement, then it is said to be 100% net long. If all of the activity is below the settlement then it is said to be 100% net short. The overnight inventory situation matters most and has the most impact on early trade when it is skewed 100% in either direction because when the imbalance is very large like that then the odds of an early correction increase greatly. This is due to the fact that most... that net shortThe concept of being more short than long in an options spread by creating options spreads where you are selling more structures than you are buying or selling wider structures than the ones you are buying. Example would be a broken wing butterfly. This spread is made up of two structures, one long vertical and one short vertical. In the BWB, the short vertical is wider than the long vertical. When you are long this spread, you are said to be in an options position that is "net short"
but not 100% so. As of now we are trading close to overnight halfbackA term for the halfway point between the high and low of any session, could be a day session or an overnight session. On Peter's market profile charts it is always a dark yellow horizontal line at that level. and I am noting that the overnight distribution is very wide which tells me that the market is balancing and accepting the higher prices. As noted above, the ONLOvernight Low. A term mostly used for the futures market as it trades almost around the clock. To be precise, in the /ES this would be the lowest price between 4:30pm EST and 9:30am EST the next day. traded into a long line of single printsAny section of the market profile distribution that is only one TPO wide. Single prints are a sign of emotional buying or selling as very little time was spent at those levels and thus there is no value there. The endpoints of single print sections are considered to be potential support or resistance points. but didn’t get very far. All that is carry forward M.G.I.Market Generated Information.

ShadowTrader Cumulative Tick

Beef up your "quad" and by putting your tickThe net cumulative tick reading on the NYSE or Nasdaq Composite. This is measured by the number of stocks ticking up minus the number of stocks ticking down at any given moment. It is the least used of the internal indicators but is discussed from time to time. Generally the tick readings are only helpful when they are at extremes such as +1000 on the NYSE to indicate that program trading is ensuing. indicator on steroids!

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