Market Profile - Daily Updates

[josephhawkins 10]

$CPA closed down 3.74 percent on Tuesday, August 25, 2015, on 1.61 times normal volume. The bears made the stock sink to a new 52-week low. Due to the stock's strong downtrend, its oversold condition may remain that way and should be discounted.

[josephhawkins 10]

$CPA closed down 3.74 percent on Tuesday, August 25, 2015, on 1.61 times normal volume. The bears made the stock sink to a new 52-week low. Due to the stock's strong downtrend, its oversold condition may remain that way and should be discounted.[ATTACH]40042[/ATTACH]

[Southpaw 10]

Volume is lighter than yesterday yet still high: 620K at 0545am PST. O/N has wide range; 73 handles. O/N inventory is long but not 100%. Most of the activity has been on the bid side, steady. As of now we would be opening in balance relative to the past two days. Balance rules should be applied:

1) Look above or below balance and fail; the opposite extreme becomes the destination in this case.

2) Look above or below and accelerate; which would initially target the prior pit levels / O/N levels. Beyond these levels on the upside would be the weekly low from 2/6/15 at 1958.50, then the gap fill at 1968. To the downside past the levels mentioned above would be the Oct '14 low; the 1800 area.

 

O/N high 1923.50

O/N low 1850.5

Prior pit high 1947.25

Prior pit low 1860

Settle 1873.75

I apologize for the graphics, I couldnt fit the whole profile into it.

[Senior 10]

Is buying MSFT a good idea right now or should I wait longer? I mean it's at 40.55 when it was around 47 just a bit ago.

[Southpaw 10]

It appears to me that most of the morning the mkt was adjusting the long overnight inventory. Buyers were waiting in force near yesterday's settle. 41 contracts on the low which was 7 ticks above the settle.

 

When traders do not wait until a mechanical reference (mechanical references are levels such as O/N high and low, pit session high and low, 1/2 back, etc.) to step in, it is a sign of strength. Between these innovators, early adopters and the rest of the herd, they steamrolled the bears - and any other trapped shorts expecting more range extension to the downside.

 

Tomorrow may reveal whether the rally was purely short covering and/or new money buying. Short covering alone weakens a mkt as it removes buying power, and once complete, the mkt usually resumes the direction it was moving. If there was enough longer term new money entering the fray, then continuation is very likely.

Nonetheless, today was a balancing day as it was an inside day. On a daily chart the 3 day balance can be clearly seen.

 

The profile graphic today is very reduced, I had to do this in order to fit the last 3 days. I want to show how value has been developing over the same. Viewing this confirms a mkt that it is in short term balance. Value areas are the gold bars to the left of the profiles.

I also post these recaps on my FB page as well.

https://www.facebook.com/pages/D%C3%B6bler-Derivatives-LLC/294362757431510

[Southpaw 10]

Volume is getting back to normal and is moderate; 393K as of 0545am PST. Currently trading a 16 handle gap to the upside Gaps are measured from the prior pit highs/ lows. Gap rules are in play;

1) Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher. Large gaps may not fill or fill partially on the first day. pay attention to halfback: 1949.50

2) If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally.

 

O/N high 1964.50

O/N low 1934.50

Prior pit high 1943

Prior pit low 1875.5

Settle 1936

[Southpaw 10]

NOTE - this recap is long. I usually make an effort to keep them short. But there was alot of things in todays session that are very worth documenting as a recap and well worth the read.

Three very important concepts I want to cover in this recap. Nuances about the Market Profile. They are reliable and consistent.

 

--> First thing is, I was looking for a destination to be mindful of should the gap from 8/21 be closed today. The first one I noted on my chart was the 2 single prints in the 8/21 profile at 1981. These 2 single prints separate distributions in the profile and can be used as a target. The 2nd destination was the anomaly at 1986.25. Anomalies can also can be used as targets. The gap closed and the mkt spent 2.5 hours between these 2 levels and buyers struggled to push it any higher. What was working all morning wasn't anymore. That was, buyers buying every dip.

I also noted that the profile was very thin, indicating emotional, non-thinking buying. But with value migrating w price, it was difficult to determine what would unfold.

 

--> Second thing, long liquidation break. I track any breaks and/or rallies that happen in any period starting in J period. 64% of the time one or more of these events happen (115 sessions have been tracked). Aside from this metric, when buyers couldnt push price any higher after successfully buying every dip early on, and they spent 4 periods fighting w the bears, at the very least I knew it was real dangerous for anyone holding longs. The first indication was in I period when the 1 T.F. up had ceased. Once J opened and traded down w volume to support, the rout was on.

 

--> Third thing, referring to the gap rule that if the gap closes and value cannot get to overlapping, it increases the odds exponentially that a late day rally in the direction of the gap will ensue. Technically the gap was a handle shy of closing today's gap. But if you consider the prior 3 days as balance, combined that gap was closed. Value was nowhere near overlapping, and a violent rally followed. Incredible.

 

Top down:

Monthly: 1 T.F lower yet excess low forming. Balance and excess are the two most important concepts as far as the profile is concerned.

Weekly: 1 T.F lower yet excess low forming. Gap is closed.

Daily: 1 T.F higher out of balance (3 day) to the upside.

 

I apologize for the length of this recap. But these concepts played out today like a text book. I hope that at least one person reading this has picked up something to use in their own trading.

[Southpaw 10]

Volume: 312K as of 0550am PST. O/N inventory is short but not 100%. Looks like we will be opening inside yesterday's range, and value area. Balance rules apply.

1) Look above or below and fail.

2) Look above or below and accelerate.

3) Remain within balance.

 

Should the mkt accelerate to the upside. A couple of targets could be the afternoon rally high from 8/21/15 at 2002.25 (which is an anomaly on the profile), and the single prints from the same profile at 2006.75

 

A couple to the downside could be 1956.25 which is the B period low from yesterday. This is where the buyers really stepped in and we had that upward march to 1986, also a high volume node. There is also the daily gap from yesterday that didnt close; 1943.

 

O/N high 1992.75

O/N low 1967.25

Prior pit high 1990.25

Prior pit low 1944.25

Settle 1989.5

[Southpaw 10]

Volume today was substantially lower than the previous 7 sessions. 1.9M contracts and some change. Total rotational day with probes failing at both extremes on several occasions. Textbook day of balance. Very prominent TPO POC right in the middle of the profile. 12 wide out of a 14 TPO day. Not much else to comment on. 1 T.F. higher on a daily basis and the excess low on the weekly is confirmed. Next week should be interesting.

[Southpaw 10]

O/N volume is 242K as of 0545am PST. Overnight inventory presents itself as short. But when viewed on an expanded profile, we can see that the majority of the trade has been higher. These situations are difficult to distinguish. Currently a handle of gap to the downside. I doubt that will be the case come open. If we do open within Friday's range, balance rules apply. They are posted in Friday' Morning Update post.

O/N high 1977.25

O/N low 1959.25

Friday's pit high 2112

Friday's pit low 1971.5

Settle 1988.75

[Southpaw 10]

. Light volume 1.86M contracts traded. Two sided trade today. Price probes on both ends of the range today didn't find acceptance. In fact, almost a repeat of Friday's action. Keeping this trade environment in the back of my mind allowed me to capitalize on trades today.

A frequent thing Jim Dalton always mentions is that traders will do what works until it doesn't. Today was an example of that.

Value was overlapping to lower. So now we are 1 T.F. lower on all three of the Daily, Weekly and Monthly timeframes.

I'd like to point out that price struggled around the POCs (both TPO and Vol) from last Thursday's (lower end of range today) and Friday's profile (upper range of today). On a daily chart, we now have a 3 day balance bracket with upper extreme (1990.25) and lower extreme (1944.25) to use as destinations for trade.

Ive added a note to a couple of the charts, worth a read.

[Southpaw 10]

China is weighing on world markets. I don't have much to bring as far as an analysis. O/N trade is 50 handles in range. Mkt is 40+ handles gap down, volume is high; 510K as of 0550am PST. I'm going to be sitting on the sidelines until some form of structure develops, if at all today. In looking for targets; to the upside is closing the gap left from 8/27/15 (1944.25), then of course the gap from today. Being so large, I doubt that will fill today.

To the downside I find myself looking at the weekly low from 8/26 week (1875). Then the O/N halfback at 1941.25 could be a level to enter or exit depending on what the mkt does around this level.

O/N high 1966.25

O/N low 1916.25

[Southpaw 10]

Very sketchy trading day. When the profile is viewed expanded, it is quite obvious that the am session's attempted direction was up. D & E period was spent balancing (two-sided trade) - I noticed that in this balance, sellers were stepping in on every rally. Once G period opened up (9-930am PST), sellers prevailed and the mkt liquidated. The pm session's attempted direction was down. Conflicting info to say the least.

Viewing this on a bar chart is not quite so obvious. A bar chart's attempted direction today (say 30min) could easily be interpreted as down for the session.

Let's break down some structure:

 

> Value remained in the upper portion of today's range.

> TPO POC remained in the upper portion of today's range.

 

So, the information tells me that the mkt wasn't accepting the attempted direction being down. We are back inside the previous weeks 3 day balance bracket. Every one of these 3 days had very decent excess lows. This is evidence of aggressive buyers trying to take advantage of low prices.

 

> There are a few anomalies left in today's profile, evidence of emotional selling.

> We have a naked gap to repair to the upside, which failed to fill on 8/27.

> There is a prominent TPO POC (1972.75) from yesterday that usually attract price.

 

Prominent and very prominent TPO POC's are anomalies and they get repaired by being revisited by the market during day session hours.

Both the excess lows below, the naked gap, and the prominent TPO POC above makes a good case for the market to make a move up. Should we open higher tomorrow, we could get a decent short covering rally. But if we open with more weakness, I'll be ready for that mindset too.

[Southpaw 10]

O/N trade is in balance. Balance rules apply. 1) Look above or below and accelerate. 2) Look above or below and fail. 3) Remain within balance and rotate.

Looking at the O/N profile you can see most of the trade has been in the upper portion of yesterday's range.

O/N Inventory is long but not 100%.

O/N high 1939.00

O/N low 1907.25

Prior pit high 1939.5

Prior pit low 1898.75

Volume as of 0545am PST 338K

[Southpaw 10]

Patience paid off today. From the open the mkt repaired the anomalies from yesterday, and adjusted the O/N inventory. I didnt trade this move, I never trade the first two sessions. Personal preference to save the monetary and emotional capital. But I was waiting to see what would happen after the 1st two periods; and after the following 1.5 hours of wide range balancing, we got the move up.

 

We also got a late day spike, which closed the gap from 8/27. We must wait until tomorrow's session to judge the movement for follow-through and conviction. I'm considering the base of the spike today's open.

Spike Trading Rules:

> Opening and remaining above spike. Very positive and suggests that the latest auction had not gone high enough to cut off the buying.

> 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.

> 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.

 

Today left a very prominent TPO POC. (Prominent = much more pronounced when reading from left to right. Very Prominent = 75% or more of the 30min periods). Carry this info fwd as a target should the mkt reject the spike come the open. Should the spike be accepted, then the destination becomes the gap close at 1962.25 from 8/31/15.

Most of the day was spent in balance, if the spike is accepted, I would see this as very positive as a breakout from balance and acceleration.

[Southpaw 10]

Currently trading a 10 handle gap up. Recall the spike rule "Opening and remaining above spike. Very positive and suggests that the latest auction had not gone high enough to cut off the buying."

Gap rules in play today,

1) Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher.

2) . Large gaps (10+) may not fill or may fill only partially on the first day. Pay attention to “halfback” of the gap distance.

3) If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally.

 

O/N high 1968.75

O/N low 1944.25

Prior pit high 1948.25

Prior pit low 1916.25

Volume: 276K as of 0550am PST

[Southpaw 10]

Attempted direction overall today was down, with lower volume and higher value indicates a strong directional performance. Another text book day as far as the Market Profile concepts go;

 

Let's go over what happened:

Decent conviction to the upside off the open. The mkt closed the upside gap from 9/1, and took out the naked TPO POC (very prominent one) from 8/31. Prominent and very prominent TPO POC's are considered anomalies and have a strong draw to price returning to them.

 

Then, we had nice long liquidation for several periods.

The rest of the day following the high was spent adjusting the long inventory from yesterday, and overnight. Sellers were taking advantage of this event and selling every rally pretty much into the close.

 

The mkt closed the gap from today's open as well.

There is evidence of forcing action on the way down today indicated by the number of anomalies left in the profile. These are created by emotional traders, day timeframe mostly.

 

We are 1 T.F. higher on a daily basis for 2 days now.

 

Tomorrow I've heard the floor clears out by half day on this 3 day weekend. Keep this in the back of your mind if you are trading

[Southpaw 10]

Trading out of balance (relative to yesterday) to the downside with a 37 handle gap.

Gap rules apply.

1) Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher.

2) . Large gaps (10+) may not fill or may fill only partially on the first day. Pay attention to “halfback” of the gap distance.

3) If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally.

 

Should the mkt open and trade with the gap a couple of targets could be pit lows from 9/1 and 9/2 at 1916.25 and 1898.75(which is this weeks low).

A few targets should the mkt attempt to close the gap could be the prominent TPO POC from 9/2 at 1932.25. If the gap closes, the anomalies I discussed in yesterdays recap come into play.

 

O/N high 1949.25

O/N low - making new lows at this time so I will not post

Prior pit high 1973.50

Prior pit low 1942

Settle 1945.75

Volume 436K as of 0600am PST

[Southpaw 10]

Lower volume, lower value, and attempted direction being down suggests a slowing market. Last week was an inside week, a form of balance. Combining the short inventory from O/N trade before Friday's open and sellers pushing the market lower in the day session, this contributed to the short covering rally we saw in the PM session.

 

The selling left a poor low (evidence of traders getting themselves too short), and a couple of anomalies in the profile (evidence of forcing action).

 

Both the TPO POC and the value area remained in the center of the range from Friday. Which can be interpreted as a balancing day. No real bias for Tuesday as on a daily chart it's obvious the mkt is in some chop.

[Southpaw 10]

O/N inventory is 100% long and currently mkt is trading a 10 handle gap to the upside. I am using Friday's pit session high for measurement of the gap. Mkt is also out of balance to the upside. Once again apply gap rules for today's trade.

 

1) Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher.

2) . Large gaps (10+) may not fill or may fill only partially on the first day. Pay attention to “halfback” of the gap distance.

3) If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally.

 

O/N high 1961

O/N low 1930

Friday's pit session high 1930.75

Friday's pit session low 1907.75

Volume as of 0545am PST 467K

Friday's settle 1921.25

[Southpaw 10]

Attempted direction today over all was higher, with lower volume, and higher value (relative to Friday's session) implies a slowing market. Some conflicting info to this assessment is the fact that we held the gap up today, and contrary to the positive side of holding the gap, value nor the TPO POC migrated with price today.

 

Once again, evidence of forcing action on the way up today, as it left a few anomalies in the profile, a prominent TPO POC being one of them. Anomalies get repaired by being revisited by price during day time trading hours only.

 

Today's rally was a short covering rally. One indication I mentioned above was how it left anomalies, but another tell is the 'b' formation prior to a short covering rally. These 'b' patterns are formed by traders getting themselves too short. The opposite is a 'p' pattern, when traders get themselves too long (potential for long liquidation. These resulting events do not necessarily have to happen on the same day) I've split my profile out so this pattern can be viewed easily in a graphic.

The last 8 eight days have had some odd behavior - reference the daily chart.

[Southpaw 10]

O/N inventory is net long, but not 100%. Same situation as yesterday, trading a large 10+ handle gap to the upside. Gap rules apply.

1) Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher.

2) . Large gaps (10+) may not fill or may fill only partially on the first day. Pay attention to “halfback” of the gap distance.

3) If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally.

 

A point of interest is the O/N high at 1992. The weekly (pit session) high from 8/28 is 1991. On a weekly level we have a 3 week balance area. I'm applying balance rules to this area.

1) Look above and accelerate.

2) Look above and fail (O/N low on the short term becomes the target)

3) Remain within this balance area and rotate.

 

O/N high 1992

O/N low 1964

Prior pit session high 1968.75

Prior pit session low 1944

Settle 1966

Volume 267K as of 0545am PST

[Southpaw 10]

Today's structure was very poor. This is evidenced by a quadruple distribution (distributions are separated by single print TPO's), and several anomalies. Long liquidation was the game today. Starting w last Sunday's afternoon session, every session (day and night) up to today was accumulating long inventory. Traders who were prepared had several opportunities to get a piece of today's adjustment of this long inventory.

 

Today's value area remained overlapping to higher, and the TPO POC remained in the upper portion of the range. Was today merely an inventory adjustment? Dalton has said several times that before a mkt can rally it has to break. With the poor structure of the recent profile's I believe it's safe to assume that the longs were weak longs.

 

The balancing bracket on the daily chart is becoming more obvious, with today's settle (1943.25) putting us for all intent, right in the middle of this balance. With such a wide range today, tomorrow may be nothing but an inside day while the market absorbs the price action today. Something to keep in mind.

 

If we open tomorrow and continue to the downside, there is a poor low at 1907.75 from 9/4 that may be a destination trade. Also, the bottom of the current daily balance traders could target as well.

[Southpaw 10]

Currently trading a 5 handle gap to the downside. Gap trading rules apply. Seems to the norm' lately.

1) Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher.

2) If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally.

 

O/N inventory appears to be balanced.

Keep in mind should we open and auction to the downside, the potential destinations.

 

O/N high 1964

O/N low 1923.75

Prior pit high 1987.5

Prior pit low 1935.5

Settle 1943.25

O/N volume 521K as of 0545am PST

 

I'll be leaving out of town later this am for the weekend. I won't be able to post until Sunday. Have a great weekend!

 

CORRECTION: I noticed on a couple of my other platform bar charts, the O/N low is actually 1928.5

My profile platform has it incorrect. Once I restarted it, it corrected itself.

Edited September 10, 2015 by Southpaw

[Southpaw 10]

3 days of overlapping value and balance. Today's profile was extremely wide, leaving a very prominent TPO POC behind. These have a high tendency to be revisited by the mkt at some point. We have a balance forming within a larger balance area on the daily chart. See graphic. I've read a few articles and have heard a few news reports that this weeks FOMC (Thurs) is expected to produce a lot of volatility. I doubt there will be much conviction in either direction leading up to this day.