S&P Futures Update for Sept 12, 2012

I had mentioned in yesterday's blog post that the market was quite short and what we saw today was short covering that delivered an Inside Day with another poor high. While we settled on the lows, the two back-to-back poor highs lower the odds of downside continuation. Value was unchanged and there is still no Excess on the highs. I am treating the last 3 days as Balance and unless we get any European news I expect the market to stay within Balance. Key references to the downside 1430.50 - balance area low and the prior 2012 high at 1424.75. Price acceptance below that level represents a breakout failure.

There are major news announcements scheduled for this week - FOMC meeting and German Court ruling on ECB plans - which may add to the volatility.

S&P Futures Update for Sept 11, 2012

Monday saw some late day profit taking coupled with a sell off in Apple and Google shares. Value was unchanged and the POC did not migrate lower which suggests that the market may be too short. Unless there is price acceptance below 1424.75 there is no real change in trend. The Spike is the main reference for Tuesday.

1. A price opening above the Spike would be considered positive since the price probe or spike was rejected leaving a buying tail or Excess. If this does happen - the next upside reference is Friday's low - 1432 area; above that is Monday's POC at 1435.25.
2. Opening within a Spike shows price acceptance and keeps the liquidation in tact;
3. Opening and trading below the Spike reveals that price has not auctioned (probed) low enough to cut off the selling allowing for two-sided trade. The downside auction is not over.
4. The top of the Spike - 1432.50 - is resistance.

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.