HAPPY NEW YEAR FOLKS!! Hope you all had a good year!
The year end brought in some selling - probably tax related and fund managers squaring positions. My take is this is just some liquidation versus a combination of liquidation (old money) and major new money selling. If the market continues lower - the next level of support is the 2007-2010 area which is the prior balance high. Note the matching leg highs at 2088.75 - clearly a "double top" in technical terms but not a lasting high - in fact when you see the profiles - it is a very poor high.
The daily bar below shows a market breaking out of 2 day balance on Dec 30, 2014 and is 1-timeframing lower. The initial destination becomes 2026.75 - the low from Dec 18, 2014. Filling the GAP at 2011.00 will have repaired a significant portion of the market structure left behind when the market rallied in mid-Dec. Remember, Gaps are a form of excess. First time into the Gap may get a nice bounce. As mentioned above the 2007-10 area offers support and we should see responsive buyers on first test.
I am going to show a couple of different profile pictures below and point out some information to carry forward. The first picture shows the Leg highs at 2088.75 and the subsequent breakout from a 2 day balance. Notice the prominent POC at 2086.25 on Dec 29 and note that the POC did not migrate lower as the market sold off on Dec 31.
The picture below shows the bottom 2 distributions from Dec 31 and the "b" shaped profile from Jan 2, 2015. Again, note that the POC on Friday did not migrate lower and you can draw a 45 degree line from the low to the fattest point of the POC. All of this information from the profiles points to a market that is getting too short. However, sometimes one has to wait for the auction to complete before you step in. For Monday, my focus will be on developing Value and the Rally High from Friday at 2055.75. The first sign of change will be acceptance above that level.
The year end brought in some selling - probably tax related and fund managers squaring positions. My take is this is just some liquidation versus a combination of liquidation (old money) and major new money selling. If the market continues lower - the next level of support is the 2007-2010 area which is the prior balance high. Note the matching leg highs at 2088.75 - clearly a "double top" in technical terms but not a lasting high - in fact when you see the profiles - it is a very poor high.
The daily bar below shows a market breaking out of 2 day balance on Dec 30, 2014 and is 1-timeframing lower. The initial destination becomes 2026.75 - the low from Dec 18, 2014. Filling the GAP at 2011.00 will have repaired a significant portion of the market structure left behind when the market rallied in mid-Dec. Remember, Gaps are a form of excess. First time into the Gap may get a nice bounce. As mentioned above the 2007-10 area offers support and we should see responsive buyers on first test.
I am going to show a couple of different profile pictures below and point out some information to carry forward. The first picture shows the Leg highs at 2088.75 and the subsequent breakout from a 2 day balance. Notice the prominent POC at 2086.25 on Dec 29 and note that the POC did not migrate lower as the market sold off on Dec 31.
The picture below shows the bottom 2 distributions from Dec 31 and the "b" shaped profile from Jan 2, 2015. Again, note that the POC on Friday did not migrate lower and you can draw a 45 degree line from the low to the fattest point of the POC. All of this information from the profiles points to a market that is getting too short. However, sometimes one has to wait for the auction to complete before you step in. For Monday, my focus will be on developing Value and the Rally High from Friday at 2055.75. The first sign of change will be acceptance above that level.
Hi Atul,
ReplyDeleteHappy new year...
I have been following your blog for past few months and it has helped me learn more about Market Profile.Though i do not trade S&P i always check your weekly post to understand the though process.I would request you to write an article on Orderflow too,when you find some spare time.
Happy trading...
Thanks
Binu
Happy New Year! Binu. I don't know enough about order flow to really write anything of value. There are those that claim that they can read order flow. With algos now driving approx 70% of futures trading volume - I doubt any body can credibly claim to know how to read between the lines of bid/offers.
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