Market Profile Analysis of S&P Futures – 05.21.18…

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.

Huge gap higher right on the 6pm EST open as investor sentiment rides the tariff carousel. Or perhaps roller coaster would be more appropriate. It’s on, it’s off, we’re doing this, we’re doing that, it’s $200 billion, no it’s $500 billion, whatever. For the life of me I cannot understand how and why the market is not continually going down on simply the uncertainty caused by all of this. Instead it’s being led around on a leash by policy that is completely scatterbrained, economically unsound, and changes from one day to the next according to the whims of one person. The market should be reacting much more strongly to the ambiguity but it’s simply not. Keep calm and carry forward, I guess.

Overnight inventory is 100% net long (as if you didn’t know that), and there is a true gap below us. Gap rules are in play.

Early trade today is going to tell us a lot about the tone as far as whether or not the gap is going to hold or not, especially given the fact that it’s completely news driven and it simply takes a lot more to get the RTH session rallying than it does the overnight session. As it stands now at around 9am EST, S&P futures are well off the ONH which is at 2736.25. The ONL is at 2724.25 and is the first downside reference. There is a gap below that and Friday’s RTH high as the futures opened on a large gap on the 6pm Sunday bell.

Scenario one:
The ONL is taken out on good tempo and weak internals. Friday’s RTH high at 2719.75 is the first target. Further weakness puts the TPO POC at 2715.00 into play. Note that this POC is very prominent, containing every single TPO period of the day except for the shortened “O” period. Prominent POC’s have greater odds of being tested so carry that one forward even if not touched today.

Scenario two:
The market does not fill the gap but rather uses today’s session to balance off the overnight inventory by time and not price. Futures would remain within the overnight range and not touch Friday’s RTH high. This would be relatively difficult to trade in the day timeframe.

Scenario three:
The market will either be strong from the open and rally towards the ONH, or will fill the gap partially or fully and rally back immediately. This would be a longer term bullish signal as the market acted “properly” by coming back in and filling the gap before rallying. Such a move would eventually target the ONH and higher.