S&P Futures Update for Sept 27, 2012

The short and intermediate trend is down - we have 1-timeframed lower for 4 straight sessions. Price today entered the lower balance area shown above in the Daily Bar chart (includes Globex session) and found acceptance. The destination trade becomes the balance area low of 1414.50 to 1418. The reason I am picking a larger band is because 1418.75 was the regular pit session low for the lower balance area.  I had mentioned in yesterday's post that the liquidation break was very thin and halting and did not really represent new money selling - very thin markets are often retraced.



After the initial liquidation this morning - Wednesday delivered a balanced rotational day with the market retracing most of the ground by mid-day. While Value was clearly lower - the POC did not migrate lower with Price - which implies that there may be a lot of shorts piling on and lowers the odds of further downside continuation. We have a fairly prominent POC that has good odds of being revisited. What was considered support earlier 1433.25 now becomes resistance. On the downside I would look for a initial support around the 1418-19 area.

S&P Futures Update for Sept 26, 2012

While the monthly trend remains UP - the weekly or intermediate trend has turned down - see weekly bar above. 1431.75 to 1433.25 remains a key area as that represents the level where the S&P's broke out to the upside after balancing for 5 weeks.



Tuesday delivered an Outside Day with a close on the lows - a classic liquidation break following comments from one of the Fed members. The expectation for tomorrow is continuation in the direction of the Close - however I will be closely watching the 1432-1433 area for a bounce. The structure shows that the profile is too stretched out which usually occurs when we see liquidation (old business) versus new money selling. The old saying "the market has to break before it can rally" may be appropriate here. Notice also that the POC remained within the Upper Distribution.



My reference for tomorrow is the Spike - the top of the Spike at 1443-44 area is resistance. Opening within a spike shows price acceptance - so expect the market to come into Balance. Trading below a downward spike reveals that price has not auctioned (probed) low enough to cut off the selling allowing for two-sided trade. The auction is not over. My expectation is that we will overlapping to to lower Value tomorrow.