S&P Futures Update for Aug 11, 2014

The monthly trend has turned to the downside with the S&P's taking out the June and July lows. However, this appears to be a much needed liquidation versus a longer term correction. The weekly chart below helps explain this bias. In Friday's overnight session and continuing into the day session, the market bounced off a 13 week balance high at 1892. Friday's overnight low was 1890.25. My view is that unless there is clear acceptance back within this lower 13 week balance (1796-1892) we may be headed towards the 1950 area. We may however, get yet another probe into this lower balance area given that the last probe was made in the overnight session. If my bias is incorrect and we see acceptance in the lower balance, my focus is the series of stacked lows below between 1847.25 to 1857.50. I expect several stops under this area.

 

Let's go directly to the Profiles next to get some clues. Friday - we witnessed a massive short covering rally. Overnight, Traders were caught "short in the hole" when the market opened way above Thursday's close. I am treating the two distributions from Friday as separate days. Opening in the upper distribution (Dist #2) and building Value within this distribution targets the Mon/Tues highs at 1933-38 area. There is no way of telling if all the shorts have covered yet. Acceptance within and building Value in the lower distribution (Dist #1) targets the poor lows from Thursday/Friday and perhaps another test of the 13 week Balance high at 1890-92 area. The key inflection point is the 1915 area.