S&P Morning Update for July 12, 2012

Overnite we have closed the range Gap below at 1324.25 - our overnite low is 1324. O/N inventory is almost all short. More often than not there some adjustment to overnite inventory, however, if we Gap Open lower and don't fill the Gap - that would be very negative. If we close the Gap - next we want to observe if Value can get to unchanged. If Value cannot become unchanged - chances of late break increase. I continue to maintain that the Market is very short. Early morning references are the o/n low - 1324 and the Prominent POC 1336.50 above.

S&P Futures Update for July 12, 2012

 

Nothing has changed from a Monthly/Weekly perspective - the market continues to balance within a 160 point range. We closed today almost at the center of the 7 month balance. The S&P's have 1-time framed lower for the last 5 sessions. Following the FOMC announcement, the market sold off and tested the lower balance area (1330-1299) and got rejected.  Trading question for tomorrow - Thursday - do we test lower again - fill the 3.5 handle gap - and get rejected or find acceptance within the lower balance area and accelerate down to the 1300 level. Lets look at the Profiles -

I mentioned yesterday that the Profile from Tuesday was very stretched out - a sign that the market had gotten too short. Looking at the Profile today shows a Prominent POC that has very highs odds of being revisited and a 45 degree line that shows that the market is extremely short i.e. the POC did not move down as the market auctioned lower - a sign that traders were getting short in the hole. The last 3 periods experienced a short covering rally that took us back to the daily Highs however, we closed essentially unchanged from y'day. Scenario's for tomorrow:

- test lower - fill the Gap - find acceptance and build Value in the lower balance area - target then becomes the 1300 level

- test lower - fill the Gap - get rejected - and build Value within Wed's range.

- Open in Balance - tag the prominent POC and auction higher into Tuesday's range.