Market Profile Analysis of S&P Futures – 04.16.18…

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Overnight inventory is 100% net long as futures gapped at 6pm EST last night and kept going from there. As of now we would not be opening on a true gap so gap rules do not apply.

The gap this morning is perplexing to say the least as it comes on the heels of Friday’s classic look above and fail pattern where futures broke out from a large balance area, only to sell off and finish the day back inside of the balance area. This morning’s action with S&P futures currently up 20 is putting prices just inside of that balance high which I have pointed out is the peak of 3/27 at 2679.75.

Confidence is very low out there. Will sellers feel emboldened this morning and feel that they are getting a second chance at selling a top if they missed the open on Friday? Will buyers feel the same as no amount of liquidation breaks seems to keep prices down very long? Earnings are about to ramp as well.

Scenario One:
The overnight inventory will correct at least somewhat if Friday’s RTH high is not taken out at 2680.50. Note that I am using that as my reference rather than the ONH at 2678.75. The Friday RTH high is just too close to ignore. In such an opening sequence, I would be targeting 2668.25 which is the base of Friday’s early spike. Obviously further weakness would target areas further and further down in Friday’s distribution.

Scenario Two:
Any early correction of overnight inventory will be very minimal and prices will hold somewhere within that Friday spike and turn back upwards. If momentum and tempo are good, then expect the Friday RTH high to be taken. If so, then monitor for continuation very carefully because a failure to hold above that range would bring in sellers immediately.

Scenario Three:
Some form of balance with value overlapping to up and lots of action occurring within that Friday spike area. If so, I would sit on hands.

Have a nice day,
peter

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