Category Archives: S&P 500 E-mini Market Profile Review

Short Covering Rally off September Low

With overnight inventory 100% short from the previous close, the ES gap opened lower on Thursday, extending the overnight selloff from Wednesday’s balance and trading through the 2111 September low.

B period put in an early intraday low of 2107.75 before the short covering began.

es-short-covering-off-september-lows

Although trade was directionally lower from the pit session opening bell, NYSE volume was not especially high, and the selling left a long line of single prints in the opening A period. Historically long strings of single prints are at least partially filled in before the end of the trading session in which they’re created.

Although the release of the 10:30 ET crude oil inventory report drove price down again in the eminis, the ES bounced off the September low in D period and rallied with crude as the oil futures reversed. After B period the market one timeframed higher for most of the trading session.

The short covering rally filled the gap in I period, trading through Wednesday’s low and previous close by a few ticks, but did not reach the very prominent point of control at 2134.25.

Depending on the open, an early focus for Friday could be the late pullback low at 2123.75. Acceptance above that reference could keep pressure on the shorts, if price trades above Thursday’s high at 2132.25 the daily one timeframing lower will have stopped.

retest-september-lows

But value was lower on the day and the market is one timeframing lower on the daily chart. failure to trade above Thursday’s high at 2132.25 would keep the one timeframing in tact. The market wouldn’t have to make a new low to continue one timeframing lower.

Acceptance below 2123.25 could see the market repair some of the multiple anomalies left from Thursday’s short covering rally.

The monthly chart is now one timeframing lower, and if the weekly chart closes below 2136.00 it will be an outside week, both negative. Another retest of the September low probably will not yield the same result.

(the above post and every post on es-traders.com is an interpretation of market generated information using the Market Profile, and the information contained within is to be used for informational purposes only and not to be construed as investment or trading advice. Please read our disclaimer)

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Inside Day, Prominent Point of Control in ES

S&P 500 emini futures Market Profile charts for October 11th (split view) and 12th, 2016::

prominent-point-of-control

The market traded in a balance Wednesday, rotating around the prior close and point of control/late rally high, and failed to trade below the previous session low or above the previous session G period high at 2139.50.

Wednesday is an inside day, with a very wide point of control at 2134.25.

If the pit session open is within Wednesday’s range on Thursday, a breakout from either end of Wednesday’s range should have better odds of continuation if price first trades to or near the wide point of control at 2134.25.

References above Wednesday’s high include the single print at 2143.25, and Tuesday’s excess A period single prints.

The immediate references below Wednesday’s low is Tuesday’s low at 2121.75, acceptance below that level could see price repair the near matching daily lows at 2112.00/2111.75 from September 13/14.

Often in the case of a gap opening away from a session with a prominent point of control, the more prominent the POC is, the better the odds are of price revisiting it in a future trading session. The market can get too long, or too short, away from the “fairest price”.

This doesn’t have to happen the next trading session. If the market gaps open higher or lower, what is the context of the gap? Large gaps are seldom filled the next trading session.

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Liquidation in ES Trades Through September Weak Lows

Liquidation break in the ES Tuesday coming off the U.S. Columbus Day Holiday. High confidence, directional selling from the opening bell was not accompanied with heavy NYSE volume.

es-selloff

The first 30 minute (A) period left a lot of excess single prints on somewhat light NYSE volume, and the B period bounce high was sold exactly from the previous day’s close, indications of short term liquidation and probably not early signs of a more significant selling rally getting underway.

But the selling continued from the previous close, with price one timeframing lower through D period as day and short term momentum traders piled on, trading through the prior pit session low and the poor low from October 4th.

After balancing for a few periods, the attempted rally in G period failed exactly at the B period single print, and price sold off again resuming the one timeframing lower through J period where the market repaired the succession of weak September lows (as noted in some of our previous posts), and eventually repairing the poor low from September 16th at 2123.00.

es-weak-lows-repaired

Total NYSE volume for the session was very low, at just 3.37 billion, in comparison to the large point move in the ES.

The selloff left multiple anomalies in Tuesdays’s profile. Some or all anomalies left from emotionally driven, stretched out market profiles are often at least partially repaired in either the next trading session or one soon after.

An important combined trading reference for Wednesday could be Tuesday’s late rally high/point of control at 2135.00, which was just two ticks above the close. Acceptance above 2135.00 could target Tuesday’s G period rally high, followed by the 2143.25 single print, and possibly some of the excess single prints from Tuesday’s A period excess.

Failing to find acceptance above 2135.00 could potentially see a retest of Tuesday’s low. Acceptance below 2121.75 could bring into play the back to back similar daily lows at 2112.00/2111.75 from September 13/14.

(the above post and every post on es-traders.com is an interpretation of market generated information using the Market Profile, and the information contained within is to be used for informational purposes only and not to be construed as investment or trading advice. Please read our disclaimer)

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