Tag Archives: market profile

Mostly Sluggish, Mechanical Trading After Yet Another New S&P All Time High

A new all time high, 2213.75, in the S&P 500 emini futures was made in the pre-market ahead of the open of the US pit session on Wednesday. Opening a point and a half above the prior day’s range, the pit session high could only reach 2213.00, two ticks shy of the new record high, before selling off back into the prior day’s trading range.

With apparently no interest in trading at the new record highs, mechanical selling off the open in B period sold to one tick above the previous close before balancing through I period, setting the technical tone for the day as traders await Friday’s Employment Report.

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After forming a mechanical selling ledge in E,H and I periods, a late break in J period traded through Tuesday’s pullback low at 2201.25 and weak C period low from Tuesday, before short covering back to within a tick or two of the session’s half back level and prominent developing point of control at 2205.75. Selling resumed in M period, with price trading lower exactly to the early high volume level from Tuesday’s rally starting point at 2197.50.

To date, new all time highs in the S&P that were created in the overnight sessions – while they can hold for some time – have never lasted and have always been traded through during a US pit session.

Below the market still remains plenty of poor structure to be repaired, including a poor/near matching low from November 22nd at 2191.75, and a poor low from November 18th at 2177.50.

Recent unrepaired prominent points of control also remain below at 2180.50, 2172.50 and 2167.50.

An immediate market profile trading reference for Thursday, depending on where the market opens, could be Wednesday’s point of control/rally high at 2205.75. Acceptance above that level should see price test the selling ledge at 2208.00.

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Wednesday’s D period high – just two ticks above Tuesday’s high, and B period high – just one tick from the open print, are very mechanical trading references and could have good odds of being tested.

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Late Rally Forms Upper Distribution, Anomaly, Wide Point of Control. Value Not Migrating Higher with Price.

Market Profile Chart November 15, 2106

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Late rally in J period leads to multiple distributions. Value finished higher on the day but did not migrate higher with the rally.

Depending on Wednesday’s open, acceptance in Tuesday’s upper distribution above 2074 could be the early focus. The all time high at 2184.50 is in striking distance if price can find acceptance above Tuesday’s high.

Acceptance below 2174.00 should repair the profile anomaly around 2171.00, and test the lower distribution high/single print at 2169.75. Often, if price exits one balance area and re-enters another, the potential destination trade is the opposite side of the balance.

Market Profile trading references below Tuesday’s low, should price find acceptance below 2163.00, are Monday’s naked point of control at 2160.25 and low at 2152.25. An unrepaired poor low, two TPO’s wide, remains at 2147.75 from November 11th.

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ES – Pre Election Short Covering Rally

The market gapped open 30 points above its previous close on Monday, after an FBI release over the weekend said they have closed the investigation into US Presidential candidate Hillary Clinton’s email policies.

During the recent early November selloff, the market left poor structure leaving multiple poor highs and long stretched out profiles with multiple anomalies. Monday’s short covering rally repaired the poor structure from the November 1st selloff, filling the multiple single prints and repairing the anomalies from that day, and also repaired the poor high from October 31st at 2127.75. A poor high remains from 10/28 at 2135.25.

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An immediate Market Profile trading reference for Tuesday, depending on where price opens, is the base of the late day spike higher at 2025.00. Opening within or above the spike shows that higher prices are being accepted, and price should not immediately find acceptance back below 2125.00. Price acceptance above Monday’s high could target the prior poor high at 2135.25.

Opening below the spike base could imply that the late higher prices were rejected, and acceptance below Monday’s point of control could see price test the late pullback low at 2119.25.

This market had become very short since the FBI had reopened its investigation into the Clinton emails last week. During short covering, price does not respond as reliably around normal trading references, as traders that are caught short and are forced to cover have the “get me out at any cost” mentality.

Large gap higher openings like Monday’s can cause forcing action, where shorts in the market can receive margin calls after the large overnight move, forcing them to cover. Short covering weakens a market, as it also leaves poor profile structure in its wake.

Monday’s profile, while correcting previous poor structure in the market, also left poor structure in its profile. If price finds acceptance below 2119 the next downside market profile references are the single print at 2114.50, followed by Monday’s low at 2108.00, and the large gap below.

Gaps are a form of excess and can be envisioned as single prints. Price acceptance below Monday’s lowest anomaly would be trading in that excess.

(the above post and all posts 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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