S&P Futures Update for Dec 19, 2012

 

I feel it is always to important to keep the bigger picture front and center. The S&Ps have 1-timeframed UP for the last 5 weeks. No change will occur until we come into balance or stop the 1-timeframing. With Markets being very visual - the next weekly reference above us at 1453.50 comes into focus. Lets look at the daily RTH chart - 


Tuesday's high was 2 ticks shy of the high made on 10/19/12 - the day the market broke to the downside and continued correcting until it made the November lows at 1334. The overnight high on 10/19 was 1447.25. The reason I am pointing this out is that we have rallied considerably over the last 2 days on low volume and odds are that the market may come into balance tomorrow. Price has clearly found acceptance in a prior balance area from Sept/Oct. 

Observations on the Profile below. Tuesday's profile has poor structure and looks very stretched out with several anomalies. The structure also suggests that the market have gotten too long given the position of the POC and poor high. Coupled with the fact that we left a poor low at 1425.25 - odds are that long risk remains high. The first sign of change will be price acceptance below the afternoon pullback low at 1437 - which is a day time frame reference for support.

S&P Futures Update for Dec 18, 2012

 

As mentioned in yesterday's blog - I believe the market got caught short on Friday and what we saw today I suspect was a combination of short covering and momentum traders piling on fueled by optimism of a deal on the fiscal cliff. All trends are UP. As I write my post the overnight session has taken out last week's high which was a poor high. The key reference for tomorrow is the Spike

1. A price opening below an upward spike would be considered negative since the late day price probe or spike was rejected leaving a selling tail.
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 target becomes last weeks high at 1432.50.
4. The bottom of the spike at 1422.75 is  “support". Below that we should find support around the 1417 area which was the afternoon pullback low.

Friday's POC at 1409.50 was very prominent and was not visited prior to today's rally. I would carry that information forward as these prominent POC's are usually visited within a couple of days. A good example being the POC from 12/10 that was visited on 12/13.