S&P Futures Update for Aug 21, 2012

 

The S&P's have rallied for the last 3 months from the Balance low of 1247.50 and have reached and exceeded their destination. Today the market gapped higher and broke out of the 8-month balance - made new highs - only to Settle back within the 8-month Balance at 1412.50. It is too early to tell if this is a breakout failure. From a Weekly perspective, we are still 1-time framing up.

Tuesday delivered a breakout failure to the upside. Looking at the Daily charts above show balance areas that are close in proximity - a sign of a tired market. Notice how Tuesday's low was the high of the 7-day lower balance. However, looking at the profiles below show Tuesday's Value - overlapping to higher and a POC that did not move down as price auctioned lower. The Profile shows elongation, however, low Volume suggests that this was "Old business" i.e. long liquidation as opposed to "new business" or new money selling.

For tomorrow - I would treat the last 4 days as Balance (1408 - 1417) and apply the rules for trading Balance.  The scenarios are:

1. Remain within 4-day balance; 
2. Look outside of balance and fail; If the market fails on one extreme, the destination trade becomes the opposite extreme. 
3. Look above or below and accelerate. If there is to be downside continuation - look for Price acceptance back within prior 7-day Balance and lower Value.

S&P Futures Update for Aug 20, 2012

Perspective: The S&P's have reached and slightly exceeded the 8-month Balance high - this is a Go/No Go level. All trends remain up with the Weekly and Daily trending up as well.

Friday was a low volume, low conviction day which left a poor high, poor low - both of which have high odds of being taken out and a very prominent POC that has good odds of being visited. If there is any change to the trend it will begin with price acceptance below 1411.25 - the previous 2012 high with Value building lower. There were several anomalies on Thursday that have good odds of being revisited should the trend change to the downside. For Monday - Treat Friday's range as balance and apply the rules of trading Balance :

1. Remain within balanc - low odds; 
2. Look outside of balance and fail - good odds; If the market fails on one extreme, the destination trade becomes the opposite extreme. 
3. Look above or below and accelerate.