S&P Futures Update for Aug 1, 2012

The S&Ps balanced in the prior 2-day range for the most of the day. Late afternoon saw a Spike down. A Spike is a late price probe either to the upside or downside during the market’s two-way auction process. It happens too late in the day to be verified as having been accepted or rejected.

1. A price opening and trading above a downward spike would be considered positive since the price probe or spike was rejected leaving a buying tail.
2. Opening within a spike shows price acceptance and keeps the break intact;
3. Opening and trading below a downward spike reveals that price has not auctioned (probed) low enough to cut off the selling allowing for two-sided trade. The downward auction is not over.
4. The top of the spike - in this case 1375 area becomes Resistance (previous Support). 

If you merge the 3 profiles above you will find that 1380 is a very prominent merged POC and last week's Close is just above at 1382.50. Most of the auction the last 2 days has occurred below the Weekly Close - possibly implying that traders are mostly Short. Those are key references to the upside. As mentioned before - there is major news out this week - so far it has been fairly positive.