Market Profile Analysis of S&P Futures – 04.09.18…

Value Areas and POC figures for /ESM8 and /NQM8 Futures are posted free every morning HERE. Click on any posts in the list on the left pane to see them in the main window. Don’t click on the ST logo as it will just refresh the page and you’ll get only the topmost post over and over. Click on the title or text.

EXCLUSIVE SHADOWTRADER DISCOUNTED PRICE ON JAMES DALTON INTENSIVE 2 (April 18th to May18th) – $1049 CLICK THE BANNER ABOVE FOR COUPON CODE

Current technical outlook: Bearish as market is consolidating in a large range that is punctuating a prior large downdraft. This consolidation is relatively close to the February 9th lows which points to much lower prices if there is a downside breakout because consolidating just above a support point means that the support point may not hold at all.

Overnight inventory: 100% net long. Usually the best opportunities occur on overnight inventory being 100% skewed in either direction. That is, however, only when we are trading on a true gap and not within the prior day’s range. This morning’s gap of +12 currently is not outside of yesterday’s range and thus gap rules do not apply.

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Friday’s market profile graphic is split into two distributions. The large single print spike that separates them runs from 2611.75 to 2621.75.

What could happen in order of most likely:
Scenario 1: The market will remain within Friday’s range. I put the highest odds on this because Friday’s range is very large and we are currently gapping well into it, close to halfback. As Friday had somewhat of a trending tone to it and the range was expanded, the odds always increase of an inside/balancing day to follow. If this is the case, then the action is responsive trade using profile references such as spike tops and bottoms as inflection points. 2633.00 which is the volume (and TPO) POC may be in play as a touchpoint.

Scenario Two:
The market is gapping this morning only because it is balancing off those individuals that got short in the hole late day Friday. The fact that the POC didn’t migrate lower with price supports this theory. Once that inventory situation is done balancing, sellers will return and push the market down to the 4/2 low and possibly attempt to break out of the “box” which is the large consolidation. The action here would be a directional play where you would try your best to find good trade location and hold until the low end of the balance is achieved.

Scenario Three:
The market got way too short on Friday and there are no new sellers down here and there will be an upside surprise. I put this as the lowest odds because if this was the case, I believe that futures would currently be trading closer to the ONH at 2628.25. As it is we are currently marking at 2627.25 which is well off of that high. If shorts were more nervous, they would be crowing the plate up there and furiously covering. For this scenario to have any actionable play, prices would need to take out the ONH on good tempo, volume, and confidence.

Have a great day,
peter