Market Profile - Daily updates

[Chris_Shaw]

10/01/15 Recap and prep (for 10/2).

This may be a short recap, I only traded the am session and am leaving for the boat races at Lake Havasu, AZ right about after I post today and will be gone the weekend. So no reports until hopefully Sunday.

The most important thing I want to highlight today is a perfect trade. These Market Profile concepts was the reason I was able to anticipate and expect this set up. After the early morning high the mkt came back down to the open, through it and continued all the way to yesterday's prominent POC - in B period. I also had indications of exhaustion selling around this price area on my indicators. Once C period opened, there was a good rally off the early lows (some 11 handles. 9 of which could've been had with very good trade location and risk with an exit right under yesterdays pit high). I am not conditioned to hold trades that long. However, I got a good piece of the whole swing of things, 2 pts towards the POC. And 4 pts in 2 separate trades on the way up. My day was done.
The reason as always when I highlight specific's that I post is to point out that these concepts are reliable and they work. Hopefully they spark interest in someone to study Market Profile as J Dalton teaches it. It's worth the effort, especially in the emotional capital department.

Today's profile:
1) We are now 1T.F. higher on a daily basis for two days now.
2) We are above the down trendline on a daily chart. There is decent excess lows (put another way, secure lows) on today and yesterday.
3) Value is higher along w price. This is positive for upside continuation.
4) We have a poor high, and a TPO POC that has remained exactly in the center of the profile. This may be negative short term for upside continuation. Because, the poor high is evidence that traders got themselves too long, and the POC being center is evidence that this level 1903.75 was the fairest price today.
Good luck in your trading.

 

[Chris_Shaw]

10/05/15 Recap and prep (for 10/6).

The only item that is negative about the last two sessions in the day timeframe, is the structure of the profiles. They have several anomalies which is evidence of forcing action/ emotional trading. The structures are weak. So if there is a cessation of 1T.F. higher, the 'repair' could be quick and violent. But as long as the 1T.F. higher prevails, these anomalies are a non issue.

The gap held today and all majors held bid throughout the day. Very positive for upside continuation. The 1981 level is obviously within traders sights. This is a go no/go level as its the top of the 28 day balance bracket. The market has made 4 other attempts at trading above the upper extreme (1981.75) and have failed. Tomorrow will be a very interesting day. Because, this level has been a level that I believe all timeframes have been watching as it has proven to be a level to either stay above or below on the Monthly, Weekly, and Daily charts.

 

[Chris_Shaw]

10/06/15 Morning Update.

Good Morning. Trading in balance. Balance rules apply. Overnight inventory is net short but not 100%. I will be paying close attention to the 1981 level. If price finds acceptance above this level, then there is definitely a change of market thinking.

O/N high 1975.25
O/N low 1963.5
Prior pit high 1980
Prior pit low 1955.25
Settle 1975.25
Volume 195K as of 0555am PST

 

[Chris_Shaw]

10/06/15 Recap and prep (for 10/7).

Today's attempted direction being down, with lower volume and unchanged value is evidence of a balancing and strengthening market.
Today we had a look above and fail (early morning high two ticks above the 1981.75 level). This is one of the balance trading rules. It also states that the opposite extreme becomes the target on a look above and fail. Traders didnt quite get that, but were able to take out the O/N low.
The rest of the day was chop and two sided. I was really hoping for more from the bulls today. If we open tomorrow and do not make another attempt and finding acceptance above today's high/ 30 day balance bracket upper extreme, the destination trade becomes the lower extreme at 1889.50. There are several targets along the way;
The gap left from yesterday is one.
The anomalies left from 10/2 are others as well.

Just because there is a destination trade doesn't mean the mkt will reach it. So along the way we identify intraday targets as potential entries and / or exits.
Carry fwd we are still 1T.F. higher on a daily basis for 5 days now. This is positive for upside continuation. Until we see a cessation of this, all auctions remain to the upside.

 

[Chris_Shaw]

10/07/15 Morning Update.

Good morning! The main focus for me today is if we can trade above or below this 1981.75 level. Above it, could attract longer term money as we would be clear of the 30day balance we have been in. Which, may or may not turn into a trend day to the upside. Trading below, well then there is no real change. Targets to thew downside that I have written down are:
1) Very prominent TPO POC 1971.50
2) Prior pit low 1962.50
3) O/N low 1960.50
4) Pit low 9/10 1955.25
5) Gap fill 1943.75

I've posted a screen shot of the stop run overnight when traders got price above the 1981.75 level. Pretty cool stuff.

Prior pit high 1982.25
Prior pit low 1962.50
O/N high 1985.50
O/N low 1960.50
Settle 1968
Volume 237K as of 0545am PST

 

[Chris_Shaw]

10/07/15 Recap and prep (for 10/8).

I think it's safe to say we have a short term trend to the upside. The last 5 of 6 days have been up days. 1T.F. higher for 6days now. Closed above the balance bracket high of 1981.75. Goes without saying, staying above this level is positive and will be evidence of a reordering of the markets thinking. Today left a poor low. Carry this event forward.

I've been eyeballing a Globex level on my ToS charts (24hr Daily). This level is the 1989 level. With this in mind, let's talk profile:
'A' period traded a tick below this level, B opened and traded through it only to find failure. Sellers stepped in and drove the market down to the very prominent POC from yesterday. We had a 2.5 handle bounce from this level then selling resumed and price was taken to the settle from yesterday (1968). It's so hard (at least for me) to tell exactly what's happening when it happens. But hind sight reveals that this selling was an inventory adjustment from the overnight session, as inventory was 100% long coming into today's session. From this point on, I believe that buyers from multiple time frames stepped in and took the market all the back to --- yep, exactly to 1989, the Globex level. The collapsed profile shows this very well. Jim Dalton always says, a market has to break before it can rally. I think today was an example of this, and shaking out the weaker longs.

The market short term is still very long. The last two attempts to auction outside of the 30 day balance bracket (1 to the upside, and 1 to the downside) have failed and the opposite extreme was reached. Keep this very important piece of data in your mind.
Sketchy area to be in right now, keep a flexible bias.

 

[Chris_Shaw]

10/08/15 Morning update

Good morning. Trading within balance overnight. Balance trading rules apply. The mkt is currently trading back into the 30+ day balance bracket. (Below 1981.75). A couple things to keep in your mind during today's trade.
1) There is a poor low left from yesterday. The mkt may revisit this level to repair it.
2) FOMC minutes at 11am PST. There will be volatility after this event.
Overnight inventory is net short but not 100%.

O/N high 1989.25
O/N low 1971
Prior pit high 1991.25
Prior pit low 1967.50
Settle 1987.25
Volume 219K as of 0545am PST

 

[Chris_Shaw]

10/8/15 Recap and prep (for 10/9)

FOMC data was received as positive for traders as we had a spike up to 2008.75. I'm viewing the spike base as the 1989 level. Spike trading rules are as follows:
1)Opening and remaining above spike. Very positive and suggests that the latest auction had not gone high enough to cut off the buying.
2) Opening and remaining within the spike tells us that the spike was accepted; this would also be seen as positive as value would be developing higher.
3) Opening below the spike or opening within the spike and quickly trading down below the base of the spike is negative telling us that the auction had gone high enough to attract sellers.

I dont much use moving averages in my trading. But the 200Day I know attracts alot of attention when traded around. Ive posted a ToS Daily 24hr chart for your review.
The nearest upside target if we continue to auction higher tomorrow is the pit high from 9/17 at 2011.75. Beyond that, I struggle to find some structural target traders may shoot for. The 200Day at 2055 seems to be what traders may target.

However, the market short term is very stretched out. I would not be surprised if we have a rotational day as days after FOMC seem to be a day of digestion. Another piece of market generated info Im looking at is that value and the TPO POC remained in the lower portion of the range from today indicating that the market today got itself very long.

 

[Chris_Shaw]

10/9/15 Morning Update.

Happy Friday! Overnight inventory is long but not 100%. Inventories are adjusted when the mkt trades back to the settle. Overnight trade has remained in the upper portion of the spike (positive). Currently trading a gap of a handle or so. If the gap holds into to the open apply gap trading rules. Recall the spike trading rules from the recap yesterday, apply those should we begin trading back into yesterday's session. Some possible targets to the downside are:

1) The Globex high of 1989
2) O/N low 1998.75
2) TPO POC 1984.75
3) Prior pit low 1978.75

O/N high
O/N low 1998.75
Prior pit high 2008.75
Prior pit low 1978.75
Settle 2007
Volume 203K as of 0545am PST

 

[Chris_Shaw]

10/9/15 Recap and prep (for 10/12)

I believe the attempted direction was down today. That being said, lower volume and higher value indicates a strong mkt in terms of directional performance. We also remained in the upper portion of yesterday's spike, very positive. Today left a poor high with an attempt to auction above the spike high from the Sept (9/17) FOMC day at 2011.75 (poor high is 2012.25).

We also have an open gap from Monday. With the continuous 1T.F. higher all week, and how the sellers didn't get much at all for their efforts in today's session (we spent 5 periods in two-sided trade in a 5 handle range), I would like to categorize the gap as a 'Break-away gap'; a Break-away gap occurs when the market is in the early stages of a long-term trend.

However, we are very stretched out, and volume is declining on a daily basis. We'll need more volume to hold these prices up and higher. It's very possible that longer term players have been participating to carry the market from the look below and fail (1861.50 from 9/21) of the 30+ day balance bracket, all the way to and through the upper extreme which was 1891.75, to today's high. I do not believe day and short term players could carry the market this far especially when it's been locked in a range for over a month. Just my .02
Have a great weekend!

 

[Chris_Shaw]

10/12/15 Morning Update

. Good morning. Holiday trade day. Volume is extremely light as a result: 92K as of 0550am PST. Trading within balance. Balance rules apply. O/N inventory is well balanced. Keep in mind we still have a poor high from Friday's trade. Don't mistake it's repair as a break out unless it's followed by supporting volume, and price acceptance - trading rules cover this.

There will be no recap today. I'm going to the Chargers vs. Steelers game today!
Trade well.

O/N high 2012.5
O/N low 2001.75
Prior pit high 2012.25
Prior pit low 1998.75
Settle 2006.75

 

[Chris_Shaw]

10/13/15 Recap/morning prep for 10/14

Opened out of balance to the downside and rallied through (10/12/15) range with a look above (prior two day balance and the spike high of 2011.75 from the Sept FOMC day) and fail. Sellers stepped in and the mkt liquidated the rest of the day closing on the lows. Value ended up being OL lower. A poor low was created and left a few anomalies. This indicates the selling was more short term liquidation than new sellers stepping in. Inventory on a daily basis has been long and the mkt stretched out.
O/N trade has been balanced and I don't think it's a coincidence that it couldnt get below (matter of fact, 1 tick above) the Globex level of 1989. O/N activity following an outside day is generally higher and we have not seen that. What doesn't happen is very often more important than what actually happens.
I'm interpreting this as follows; if the O/N low cannot be taken out, it may get the attention of buyers and the current short term uptrend may be continued.
We have a cessation of 1T.F higher with yesterday's session.

O/N high 1998.5
O/N low 1989.25
Prior pit high 2014.75
Prior pit low 1993.25
Settle 1993.75
Volume 197K as of 0545am PST

 

[Chris_Shaw]

10/14/15 Recap and prep (for 10/15).

Today was difficult for me to ascertain what the competitors were doing. Examples: periods D, E, & F highs could not breach each other. Once G period opened, we had a rally almost to the open. At this point I was confident the attempt to auction below the 1989 level I have been watching had failed (I guess it did for a short time). Moving on, 'I' period opened and I interpreted the two ticks it created below H period lows, was a look below and fail I went long. That was short lived. The high in J was a total head fake as it happened very quick (up and down). From that time period on, the sellers prevailed.
We are left with a poor low and sitting right on top of the previous 30+day balance bracket upper extreme.
Price, value and the TPO POC migrated lower, and the mkt is between two important levels as Im seeing it. That is 1982 and 1989.
We have had the cessation of 1T.F. higher confirmed with todays session.

Some conflicting info to carry fwd:
******* Positive ******
1) Above the 30+day balance bracket
2) Short term trend is still to the upside
3) The last two days appear to have been liquidation vs. new sellers taking positions (w no new shorts, once the liquidation/ inventory adjustment is over, the longer term direction is resumed, usually quickly). Longer term in context of the past 2 weeks of trading (being up).

******* Negative ******
1) Two poor lows now (1982.50 and 1962.5
2) Open gap remains from 10/5 (w such low confidence in the mkt I wouldnt be surprised if the mkt makes an attempt to close it at some point
3) Over all confidence in the mkt is low

 

[Chris_Shaw]

10/15/15 Morning update.

Good morning. Overnight trade is within yesterdays range, balance. Balance trading rules apply today. O/N Inventory is 100% long. Reaction to 0530 economic news this am has the ES (and all other majors) coming off a bit.

O/N High 2000
O/N Low 1985
Prior pit high 2001.75
Prior pit low 1982.50
Settle 1984.25
Volume 220K as of 0550am PST

 

[Chris_Shaw]

10/15/15 Recap and prep (for 10/16).

Over the last two days trade, the profiles had several anomalies - formed by emotional selling (or buying for up days). Yesterday, the profile shape was looking like the 'b' pattern and had a poor low. All of these clues were telling me that the selling was indeed that of emotional trading, not new money selling. Traders liquidating longs as the market was very stretched out. The 'b' pattern is an indication of traders liquidating longs and this selling being accumulated by longer time frame traders expecting to take these new longs home overnight. Nothing is in stone. But this is a common pattern and it all has to be taken into context. The overnight trade being 100% long and the failed test of the 1989 level (mentioned in other posts) in the early session provides evidence of everything mentioned above. This test was in 'E' period and left 5 ticks of excess and a nice buying tail. I'll admit, the trend today caught me way off guard. I was short going into the low, I missed the tell on the buying tail and how yesterday was the 'b' pattern. It was looking like today was going to continue to the downside.

Today had 3 distributions in the profile (distributions are separated by single prints). This is rare. Structure is weak as a result. Value and the TPO POC did not migrate with price.
However, 1T.F. overrides the migration of the TPO POC as well as value. From G period into the close we never stopped 1T.F. Evidence of at least day timeframe confidence.

Tomorrow may be a rotational day as the mkt tries to absorb today's bid action. I will be watching the Sept FOMC 2011.75 high closely. Any acceptance below this may confirm the excess high we have today. Excess indicates the end of the auction. However, should price be accepted above and beyond the the 2011.75, the next auction could also be a continuation of the recent bid activity.

 

[Chris_Shaw]

10/16/15 Morning Update.

Good morning. Overnight trade has been centered around the high of yesterday and inventory is balanced. There's a ledge at the 2015 level (noted in the screenshot) that is being defended by bulls. I do not think this is by accident.
My go no/go level is the Sept FOMC spike at 2011.75. This level is also around the highs of 10/9-12-13. Should we trade and find acceptance below this level, the weak structure from yesterday's profile will not offer much support. Should this happen I will be watching yesterday's half back at 2004.50
To the upside I don't have anything that is reasonably close to where we're at currently as far as intraday is concerned.

O/N high 2023
O/N low 2013.75
Prior pit high 2019.50
Prior pit low 1989.50
Settle 2019
Volume 168K as 0600am PST

 

[Chris_Shaw]

10/16/15 Recap and prep (for 10/19).

A great day for those who were patient and saw what was unfolding throughout the am session. I'll explain the set up after recapping the day.

Today's attempted direction was down for the most part, with lower volume and higher value implies a strong mkt. We remained in the upper portion of yesterday's third distribution, further supporting the assertion of a strong mkt. At least, for now.

Today's profile left a poor high and a very prominent TPO POC. The 1989 level was defended very well today, as traders didn't even wait for price to hit it before buyers stepped in, in force.

Let's discuss what was unfolding:
Refer to the graphic for the following if needed.
1) Sellers were getting less and less for their efforts thru 'H' period. This is evident from the poor low in B/C period, and an even poorer low when G period added to it.
2) These efforts were causing two things to shape up in the profile, 1. A 'b' pattern and 2. A 45 degree angle. The 45 degree angle is drawn from the poor low to the TPO POC. These have to be taken into context how they are formed. The sellers getting less and less for their efforts over time formed it and combined with a 'b' pattern, a short covering rally at some point (didnt have to be today) has very high odds of materializing.
Once 'I' period repaired the poor low and 'J' opened it appeared we were going to sell off. However what happened was 'J' turned into a perfect buying tail and an asymmetric opportunity.
I overlay the Market Profile onto my methodology that incorporates a set of 3 non correlated indicators from emini-watch.com - without getting too techy about it, the low in 'J' registered an exhaustion sell and bullish divergence signal on my tick bar charts. These combined with the 45 degree angle and 'b' pattern gave me the confidence to go long on the way down at 2014.75, a loss of 1.5pts as my stop was two ticks below the O/N low. I got long again on the way back up at 2014.25 for 5 pts exit right below prior pit high.

 

[Chris_Shaw]

10/19/15 Morning Update.

Good Morning. Overnight trade currently trading within balance. If we open inside of Friday's range balance rules apply. Overnight inventory is pretty short. There is still a poor high from Friday too. Overnight traded above it but only RTH counts as repair. Over the weekend I noticed that the Sept FOMC high 2011.75 is also Sept monthly high. This makes the level more important and should be your downside reference for today.

O/N high 2028
O/N low 2017.50
Prior pit high 2026
Prior pit low 2012.25
Settle 2025.75
Volume 148K as of 0545am PST

 

[Chris_Shaw]

10/19/15 Recap and prep (for 10/20)

Attempted direction was up w lower volume and overlapping to higher value is evidence of a balancing and slowing mkt. Excess and balance are two most important things to consider when looking at the market through the lens of the Market Profile. Friday and today has had some meaningful excess on the lows. Excess marks the end of auction. It's obvious the lows are being bought up by more than just day timeframe players. The highs are not as clean. Friday we had a poor high (among other things it indicated that the upward auction was not complete). Today's action repaired the poor high and also ended the day with a mere 3 ticks of excess. Not as clean as the lows. All items are supporting factors for a continuation to the upside.

 

[Chris_Shaw]

10/20/15 Morning update.

Good morning. Overnight trade is in balance, balance rules apply for today. Looking at the RTH and O/N trade over the past few days value has been migrating up. This is positive to continuation to the upside. On the contrary, this mkt is very stretched out. It would be wise to keep expectations in check.

O/N high 2027.25
O/N low 2019.25
Prior pit high 2027.75
Prior pit low 2014.25
Settle 2027.75
Volume 118K as 0545am PST (light)