Saturday, April 19, 2014

S&P Futures Update for April 21, 2014

Last week I had written about a failed breakout above a 4-month balance as price settled back within this balance. As of Thursday's close (market was closed Friday), price has settled at 1858 which is still within the 4 month balance. So, until price closes above 1859.50 (Feb High) on a monthly basis, I will maintain my position of a failed breakout. We still have 8 trading days left in April, so anything can happen. I had also mentioned in my last post that the market was very short and I suspect that what we have witnessed this past week has been a lot of short covering and structural repair.


From a weekly perspective, the market is in a 2-week balance. So Balance trading scenarios apply, i.e.
  1. Market remains within balance;
  2. Look above and fails; If the market fails on one extreme, the destination trade becomes the opposite extreme - in this case the 1803 area.
  3. Looks above and accelerates - if it does accelerate up, then odds are we make another run at the all time highs at 1892.50. 

Here are my observations as I look at the Daily Profiles from last week:
  • Tuesday - 4/15 - the S&P's broke out above a 2 day balance. 1828.50 was the breakout level and now serves as support.
  • What followed Wed and Thur was more short covering, momentum trading, and structural repair, however notice that the POC's did not rise as price auctioned higher. This is an indication that the market is too long going into the close on Thursday.
  • Thursday's high came just shy of the weekly high at 1866.50
  • The profiles from Tues-Thurs show several anomalies. Anomalies are often the result of forcing action such as short covering and long liquidation market action that doesn’t always allow for rotational, investigative auctions. They produce high odds of being revisited.
For Monday, my focus will be on the weekly high at 1866.50 and developing Value. Acceptance above these levels and overlapping to higher Value, targets the all time high at 1892.50. Failure to find acceptance above this level is negative and turns my bias to the short side (see comments for the weekly chart above).