Market Profile Analysis of S&P Futures – 01.30.18…

Value Areas and POC figures for /ESH8 and /NQH8 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.

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Futures off sharply this morning with a double digit gap down in both the S&P and Nasdaq futures. Overnight inventory is quite net short but not 100% so.

As of now we would open out of balance and thus gap rules apply.
-Go with all gaps that don’t fill right away.
-Larger gaps will often fill only partially or not at all on the first day.
-If the gap fills, meaning price gets to yesterday’s RTH low, and value is not at least overlapping, then the odds of a late day selloff increase.
-Gaps of double digits are very difficult to trade early in the session as prices tend to “digest” the gap and often act erratically.

While the overnight session pattern never has the same import as any RTH session, I do make note of extreme moves or big tails. The overnight session coming into today’s trade has just such a tail. Note that in the market profile graphic above. Traditionally, the spike is a rejection of those lower prices as they were not able to stay there very long, but we’re obviously noting that the RTH session is a completely different animal.

Overnight action did spend a solid amount of time around the 2840.25 which is marked off as “VPOC 3x” due to the fact that it’s a VPOC and it was also a POC for three straight sessions. Acceptance above or below this high volume node will be noteworthy today and could give clues as to further direction.

Whenever you are gapping strongly, remember to always think about what the market has to do to right itself and how good of an effort is it putting in along those lines. Will any corrective activity make it up to yesterday’s RTH low? Will it even make it up and past the HVN at the 2840 area? What will tempo be like while it’s advancing or declining? If you can think ahead a bit and visualize different scenarios before the bell, that’s helpful too.

Have a great day,
peter