Saturday, August 23, 2014

S&P Futures Update for Aug 25, 2014

As of last week the S&P's took out the all time high (July high) of 1985.75 and settled above that level. Volume has been low but so far August is shaping up to be an outside month. As I had written in my blog post last week the market returned to the upper end of a 12 week balance given the strong rejection from the 1892 level.  The market remains strong and barring any negative headlines S&P 2000 is within reach. These are psychological numbers and often become a self fulfilling prophecy. The weekly bar below provides a good picture of where we are at.....1-timeframing up on a weekly basis and settling above the prior all time high. I am going to use the 1978-79 level as downside support and a bull/bear zone. Staying above this level is positive for the market and may result in new highs in the coming week. Settling below 1978-79 is negative and keeps the market in balance. The coming week has several economic news announcements re: housing and GDP.

The daily bar below shows the market 1-timeframing up for several days and then coming into a 2-day balance. Balance trading scenarios apply:
  1.  market stays in balance  
  2. looks above and fails - destination becomes the other end of balance; or looks above and accelerates i.e. makes new highs. 
  3. looks below and fails - destination becomes the other end of balance. Or looks below and accelerates.

The profiles below offer some additional information to keep in mind. While Friday's Value was overlapping to slightly lower it was a perfectly balanced/rotational day with a very prominent POC. Friday's high is very poor. If you go further back, there are at least 5 naked POCs below Friday's settle. When these naked POCs begin to stack up, it usually results in a liquidation break - not a prediction but just saying that the odds of break increase. 

A break to the downside from the 2 day (thurs/fri) balance targets the naked POC at 1980.75 and below that the top of the GAP at 1970.75. However, remember the 1978-79 area that I am using as a bull/bear zone. A break to the upside keeps the trend intact and confirms a breakout from the 12 week balance. For Monday, any opening away from Friday's prominent POC has good odds of returning to that level.