Market Profile Analysis of S&P Futures – 03.10.17…

Market Profile Value Areas and POC figures for /ESH7 and /NQH7 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.

Classic excess low on yesterday’s distribution caused by late day sellers. Larger players don’t wait until the afternoon to sell a market. If you had the entire contents of your home to get rid of would you schedule your estate sale to start at 3pm EST or would you start it at 7am EST? Value has been overlapping for some time now indicating that even with temporary lower prints of price, value was never perceived as being that low by the majority of traders.

This morning we are gapping up about 12 handles currently on overnight inventory that is very close to 100% net long. So this will be an interesting open to see if there is any correction at all to fill the gap down to 2366.25 or if we hold in early trade and move higher. The market is oversold in the short term and from the overlapping value it appears that a good amount of traders are short. Also, the excess low is a sign that one auction has properly ended and another has begun. Imagine that every single item from your estate sale sold, your home is completely bare now and you’ve hightailed it over to Restoration Hardware to start filling it back up again since now you must become a buyer by default since you have nothing else to sell and you can’t sleep on the floor. That’s the excess low. You don’t go over to the store when you still have stuff to sell, you find yourself there once you’ve sold everything and you have no choice. There are no geniuses down in that spike. The sellers just ran out of stuff to sell. Futures contracts, couches, vinyl records, old video game consoles, clothes you haven’t worn since 1982, you get the picture….

So, let’s see where value develops in this session. That is always the first thing to note as things are unfolding. If you can discern where value will be either later in the session or at the close, then you also have a very valuable piece of information at your fingertips.

Gap rules apply. Go with all gaps that don’t fill right away. Larger gaps tend to not fill fully on the first day. If the gap fills and value cannot get down to at least overlapping, expect a late day rally. Larger gaps should usually be traded later rather than earlier as the action tends to be frustrating and choppy.

**Note that we are now using the /ESM7 (June) contract in the blog. It started trading yesterday.**

Oh, and I almost forgot……the all time high on 3/1 was poor. Continue to carry that forward so you won’t be surprised if the market sets another record and repairs it.

Have a wonderful day
peter