Category Archives: Market Profile
We’ve seen a pretty aggressive overnight session thus far in the ES globex. The main feature of the session is two impressive rotations higher followed by a third not impressive attempt higher all coming together to form a head-and-shoulder pattern. Interestingly, all of this activity is contained within yesterday’s range, occurring in above the midpoint of the session MOSTLY.
Yesterday I was making a fuss about the normal day we were seeing on the market profile because unlike the name, the occurrence is anything but. A normal day has a wide base from aggressive early entry of a market participant followed by disruption of the intial balance (first hour of trade) both to the upside and downside. It’s a strong signal that the market lacks directional conviction and the play is to aggressively fade the second range extension back to the mean. It had about 5 handles of profit built into it.
Going into today, we know the market lacked conviction, we know it’s overbought on the stochastic or RSI or CCI or Keltner or Bollinger band studies and we also know it’s been up all week. Therefore, I’m looking for sell orders to flow into the market.
It won’t be anything to get excited about, but we should keep in mind the proclivity to book profits into the weekend, the globex HnS, and the normal day.
Here’s the levels I’ll be working this morning:
I have very little to say today, as the influenza has me feeling rather faint this morning. Have a look at the chart markup below. Note the short squeeze last Thursday followed by the long liqudation yesterday. Neither party is pushing their initiative yet.
Perhaps it’s the crystal crack meth I’m holding in my portfolio, and the fact that each of them is a loser, but what looks like minor damage on the S&P has my portfolio down 1.5 percent today. If I was heavy long, sure, that makes sense, but with cash over 50 percent it comes as a bit of a surprise. It’s like oh hello April, I see you’re coming in like a lion.
So I’ve been forced to take two losses today; first I cut Yelp, and this afternoon Ford. Here’s the gist, at this juncture, I’m not loosening risk and letting setups work. Ford very well could turn around this week, but the daily chart is sloppy, and not something I’m lending patience to right now.
Yelp plum fell on its face, as did most of the social media space. To hold even a trace would be a disgrace. I want only the ace. I want the ace.
My holdings now are (by size) CMG, ANGI, AIG, ZNGA, CREE, and old pokey aka AWK.
We could talk about each and what they’re doing, but you have charts yes? You see much of what I do, no?
Here’s my bottom line: there’s lots of POMO on tap this month. It’s a strange environment. As we wind down into the close, we’re getting a b-shaped profile, suggesting long liquation and not much more. The sellers made progress on many individual charts, but they haven’t taken the big board yet. Moreover they haven’t controlled the big board all year. However, this is a new quarter, a page turn if you will. Therefore we all need to stay vigilant. Like, why the hell is the Yen so strong today? Just be cognizant of the environment. I’m a bit unsure, hence my huge cash.
Being a heathen of the highest order, it’s only fitting that the Lord would strike me and my family down with the influenza over the weekend. A wave swept through our households violently, like the air from a vengeful sarcophagus. Much like The Ben targets short sellers.
It’s death by vomit then dehydration for the short sellers. Their only Gatorade is a margin call then rehab.
Let’s take to the profiles, shall we?
Click the chart to enlarge it to “chocolate bunny” size and read the key notes:
Early on I’m looking for sellers. I don’t expect much from them, and I’ll look for buyers to balance out the trade above 1559. Once the data comes out at 10am EST, I’ll look for either party to begin pushing their initiative. Depending on who is asserting control of the tape, either the above profile notes for downside come into play, or we take out the highs and pump. I’m ready for either.
Don’t let anyone fool you, it’s April first, fool.
Before we attempt liftoff today buyers will want to defend the following levels. If they don’t, I have my line in the sand for reducing exposure:
Futures are 10 handles lower since the European market opened. Here are some important levels of interest today:
How we trade relative to the following sign posts will give me information regarding who is in control of the tape. Continuing to trade within this range signals consolidation/indecision, which is still a postive environment for individual setups.
I’m looking for buyers to take a more active role in today’s tape. They’ve been getting tossed about quite a bit this week by some rather large sell flow. But overall we seem to be in some rough, choppy waters.
I’m hesitant to give the bears an edge here, although I do give an edge to volatility.
Early on we’re up 3.5 handles from the close yesterday. I’m looking for sellers to enter and try and close the gap back down to 1539.50. If buyers don’t show up then a critical test of 1538 will result. This level saw large reactionary buying that was able to stop the sellers in their tracks yesterday. I plan to lean on these levels and try some longs. However, if it is lost, and trade sustained below, I will raise cash into the weekend.
Yesterday’s tight range managed to auction the value area from last Friday (annual high water mark) and successfully find sellers who were willing to send price tumbling back down to value. The overnight session has been quiet and as we approach 8:30am the markets are unchanged.
Early on my expectation is for sellers to reenter the market and probe lower for buyers. I’ll be looking for signs of a buyer reaction first at the high volume node from Tuesday’s upper distribution then at the value area high. Should the sellers press through the value area high, I’m expecting them to press down to 1538.
To the upside, any sustainable trade above the 1550 zone highlighted above could be considered constructive for the bull camp, especially on a closing basis. There were several traders on Twitter yesterday suggesting a possible island reversal on the SPY, trading up to these levels would firmly negate that price theory.
Should price sustain above 1550, I will measure bullish conviction by the size of their rotations and the price levels they’re able to accomplish, especially a clean break of the highs set last week.