S&P Futures Updates for July 11, 2012

The third scenario from my morning blog post played out well - the S&P's failed to close the Gap at 1357 - encountered Sellers - traded thru the 2-day balance (Fri/Mon) and well into the large Gap below. Price stopped at the top of the lower balance area between 1330 and 1299. Usually the day after large moves such as these the market takes time to digest the move. Trading question for tomorrow is do we see further downside follow thru. Alcoa kicked off the earnings season with disappointing results. All eyes will be on the FOMC minutes and the market will be listening for clues on further Fed easing. 

Lets look at the Profiles:

Tuesdays profile is very stretched out with 5 separate distributions. Very stretched out Profiles like today are often a sign of a Market that got too short because of emotional selling. Notice the POC or Fairest Price to do business did not migrate lower as the market sold off. Treat each distribution as a separate day and see if we open in or out of balance relative to the lower (Dist 5) distribution. A 6.25 handle Gap remains below. Trading into the Gap and finding acceptance in the lower balance area targets the 1300 level. A rejection at 1330 takes us back into the upper 2 day balance and 1350 level.