S&P Futures Update for Oct 12, 2012

 

The S&P's have made it down to the Balance Low for the second time. Support at this level has weakened as the market makes multiple attempts to get thru it. If the market does break thru - the first reference is the 1418 area - the breakout level above which the S&Ps made new highs. Below that is the lower Balance area high at 1410. Lets look at the profiles - 



As I mentioned in yesterday's post - the market was too short on the close with low odds of downside continuation. The S&P's opened higher as a result of shorts covering in the overnight and the pit session but closed on the lows. The overnight trade made new lows at 1421.25. Value was higher and the POC did not migrate down as the market was selling off - suggesting that the market may still be too short. In addition the selling was not pronounced - it was more "stutter step" in nature - with not a lot of conviction. I view the last two days as balance - we have a poor high and a poor low - odds are high that we test both ends of this balance in the next couple of days.

S&P Futures Update for Oct 11, 2012

The S&P sold off again today and made it down to the 4-week Balance Low. The question now is do we see further downside continuation and enter the lower balance area bracketed by 1387 to 1418 or stay within the upper balance. Lets look at the Daily Chart -



The Daily chart above shows that we are 1-timeframing down for the last 3 sessions with price settling within a prior 4 day balance. Unless we get rejected from this balance area - the destination becomes the balance low of 1414.50.  Lets look at the profiles - 



The profiles from the last two days indicate long liquidation as opposed to a combination of liquidation (old business) and new money selling. Volume has been low. Coming into the pit session this morning, the market was short overnight and sold off further during the pit session.  The poor low is an indication of a market that is too short. Value was clearly lower however, the naked prominent POC above and several anomalies in today's profile lower the odds of further downside continuation. Lets see what tomorrow brings however I am going to be cautious on playing the short side.