An early selloff Thursday saw the market take out April’s low at 2026, thereby ceasing the one time framing higher on the monthly bar. The daily bar chart is one time framing lower and, and unless the weekly bar can take out 2080 to the upside on Friday it will also resume one time framing framing lower. When one time framing comes to an end it can signify a change, a change in sentiment and a change in trend. While this doesn’t guarantee a change, it increases the odds for it. The odds have increased for the intermediate term auction to change to the downside.
At 3.8 billion, NYSE daily volume was not that high to support the selloff, which could just have been caused by aggressive short term traders trying to run stops, thus resulting in the short covering rally later in the day.
But Thursday left a poor low with only one tick of excess at 2022, and a prominent point of control at 2028. The odds favor those price levels to be revisited. Thursday’s close at 2039 was just two ticks above the previous weekly low.
On Friday, an options expiraton day, trading below Thursday’s point of control targets the poor low, and below that targets the near matching previous daily lows from March 17 and 24 at 2012.
If there’s more to the upside on Friday, depending where the market opens in relation to Thursday’s range, price would have to stay above last week’s low and Thursday’s L/M Market Profile period highs at 2038.50, then look at Wednesday’s FOMC rally high at 2045.75. Late day rally highs from recent sessions should be carried forward, as they can prove to be strong short term resistance if price is trading below the level.
Market Profile update 9:20 am Friday 5/20/16: The market will gap higher on the opening and has already looked above the Fed day rally high. The overnight high at 2047.50 is an early reference. Will the market gain acceptance above that level or it will correct the long overnight inventory and return into Thursday’s range. Gap trading rules now apply.Share
Or was it more “excuse du jour”? Tuesday again was dominated by shorter term traders as price rallied off the open exactly to Monday’s close, a very mechanical and “weak” reference, then sold off 9 points exactly to the single print from Monday’s lower distribution. When the point of control couldn’t get 8 wide at 2055.75, sellers came in coinciding with remarks from Fed speakers Williams and Kaplan regarding the possibility of another rate hike in June. This drove price down to Mondays weak low (weak because it was exactly at Friday’s close) as expected and beyond through Last weeks low at 2038.50.
Tuesday ended as another double distribution day, look at each distribution as a separate balance area. The top of lower distribution from Tuesday’s selloff at 2045.75 and the base of the spike at 2051 are immediate references for Wednesday. Tuesday’s wide POC and weak high could also be revisited in the coming days, and again the downside referenced April low at 2026 is still in reach.Share