Saturday, May 4, 2013

S&P Futures Update for Monday May 6, 2013



All Trends are UP ! The Market has been 1-timeframing on a monthly basis for the last 6 months. So far there is no sign of larger players selling into these new highs. However, be prepared for change. Quantitative Easing and low interest policies in the both U.S. and Japan have made these markets the best performers for 2013.


Following the Unemployment Report the S&Ps gapped up more than 11 handles in the pit session. A large gap such as the one we saw Friday could be an exhaustion gap or the beginning of another leg higher for the market. For Monday, my focus will be on the Gap and whether the market attempts to fill the gap or continue higher.

Lets look at the Profiles next. Friday profiles shows a P formation - a sign of short covering as many traders were caught the wrong way following the unemployment report. It is not uncommon for the market to assimilate new information and regain balance after a large gap up - implied by the prominent POC. Fridays high was poor - indicating that the auction is not complete to the upside. The pullback low at 1608 offers short term support - taking that level out with conviction targets the gap below. The breakout level at 1593.25 - 1595.50 now becomes intermediate term support. 1595.50 was a high made in the Globex Session.

Friday's POC was very prominent - any opening away from the POC has good odds of returning to that level. Value building above Friday's POC targets the poor high above and maintains the trend up. Value building below the POC targets the Gap below. Odds are that the first probe into the Gap will be quickly rejected.

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