S&P Futures Update for Sep 10, 2012

All Trends - Monthly, Weekly and Daily are UP. The market has broken out of large balance area and is 1-timeframing higher. The next upside reference is 1441. The profiles suggest that a lot of this rally is short covering versus new money buying as the structure does not show elongation and price is not sprinting higher. While prices may be higher, remember, once the shorts have covered, the market is weakened as substantial buying power has been removed from the market. However, we are building higher Value and settling on the highs.

All eyes are on the FOMC announcement scheduled for Thursday this week where the expectation is that the Fed will announce some kind asset purchase program or Quantitative Easing. Lets look at the Profiles:

 

Friday profile was very "squatty" with a prominent POC and a late day Spike. Both Thursday's and Friday's prominent POCs lower the odds of upside continuation, however, we are forced to wait and monitor where we open Monday in relation to the Spike.

1. A price opening below the Spike would be considered negative since the price probe or spike was rejected leaving a selling tail or Excess. If this does happen - the next downside reference is the 1434.50-1435.5 area - POC from Friday; below that is Thursday's POC at 1428.75 and below that is Thursday's pullback low at 1427.50.
2. Opening within a Spike shows price acceptance and keeps the rally in tact;
3. Opening and trading above the Spike reveals that price has not auctioned (probed) high enough to cut off the buying allowing for two-sided trade. The auction is not over.
4. The bottom of the Spike 1337 - is “support". 

The previous monthly high at 1424.75 remains a key reference and support. Acceptance back below this level represents an upside breakout failure.