Sunday, July 20, 2014

S&P Futures Update for July 21, 2014

While the longer term monthly trend is UP, the weekly chart shows a market that has come into a 3-week balance. Coming into the new week, the market can continue to balance, explore/test the edges of balance or break out of balance. There is still no excess at the all time highs i.e. the auction is not over. All the downside references mentioned in my last blog were tagged to the tick.


Given all the turmoil around the world, market volatility is up. Friday was an inside day - a sign of balance where the market is waiting on/assessing news/world events as they unfold. Going into Monday, a break to the upside from Friday's inside day targets the all time high at 1978.25. A break to the downside targets Thursday's low at 1949 and below that the overnight low coming into Friday's pit session at 1942.50.

 Let's look at the Profiles next:- Thursday's sell off was a knee jerk reaction to the downing of the Malaysian airlines jet. The POC did not migrate lower as the market sold off in the afternoon session. Overnight the market sold off further to the prominent POC at 1942.50 mentioned in my last blog post. Coming into Friday, we saw a market that was caught short in the hole and we witnessed a short covering trend day up following the pit session open.

While Friday was an Inside Day, I am treating the 3 distributions as separate days. Take it one distribution at a time. Opening below the upper distribution is negative. Some Data points to note: Thursday's high was poor, as well as the high from July 3. Friday's low was poor as well - a sign that the market was caught short. A break to the upside targets the poor highs mentioned above. Below the upper distribution, I will be watching the single prints at the 1961.50 level for support. If this area does not hold, we may revisit the lows from Thursday as well as the overnight lows at 1942.50.