May 252012
 

The Value Area Report is a daily trading plan based on Auction Market Theory, Market and Volume Profiling techniques for the S&P and Russell Emini Futures (the values in these reports can easily be adapted for SPY [*10] and SPX markets [small premium adjustment]).   Even if you do not use this type of analysis, you should know about it, because large numbers of very well capitalized traders use this approach. As a result, it is likely in your best interest to know and understand it. I have written about these techniques here: http://markettradersjournal.com/volume-profile-analysis/ and elsewhere in this blog.  I also advise reading the notes for both markets as they are related markets. Differences between them can provide clues to what is really going on (though I do not cover cross market analysis in this report). The report is for use on the date posted above based on profile numbers from the trading day before.

For the Emini S&P (ES) Futures:

Overall Outlook:

Today we closed below value.  This is bearish. The value area was inside the previous day and is narrower and inside with a D shape. This is a substantial breakout mode.  Use caution as the bears have not likely gone away. This is a long weekend and there is no trading for the broad market Monday.

Bull Scenarios:

If we open above 1322.25 look to buy at 1322.25 or 1319.00 areas.

If we open above 1322.75 then this is even more bullish and may cause a runner to the upside started by stops being hit.

Bear Scenarios:

If we open below 1317.25 look to sell at 1317.25 or 1319.00 areas.

If we open below 1312.00, then this is even more bearish and may cause a runner to the downside started by stops being hit.

Neutral Start Scenario:

If we open between, 1317.25 and 1322.25, then ranging is more likely.

Always be cautious of the impact of reports that come after the open of the day.

Special Observations:

Notes: There is a virgin point of control at the 1300, 1325 and 1332 areas. Watch for potential reversals at these areas.  1305 is also a magnet price area as the composite HVN. We did manage to range in the 1300 to 1325 zone as expected and are still in that range. Be aware of the potential for breakout consistent with the trade plan.

For the Emini Russell (TF) Futures:

Today we closed at value and formed a narrow D shape inside yesterday's range.  This is a breakout mode.  The value area is higher and is narrower.  The market opened lower today and found support at yesterday's POC. Use caution however as the bears have not likely gone away.

Bull Scenarios:

If we open above 766.30 look to buy at 766.30 or 765.40 areas.

If we open above 768.20, then this is even more bullish and may cause a runner to the upside started by stops being hit.

Bear Scenarios:

If we open below 763.50 look to sell at 763.50 or 765.40  areas.

If we open below 761.80, then this is even more bearish and may cause a runner to the downside started by stops being hit.

Neutral Start Scenario:

If we open between, 763.50 and 766.30, then ranging is more likely.

Always be cautious of the impact of reports that come after the open of the day.

Special Observations:

Notes:  There is a virgin point of control at the 778 and 749.60 areas.  We are currently in a LVN on the composite that is bounded by 759 below and 787 above.  Prices should be fairly free to roam in this range but be aware of the potential for breakout based on the trading plan.

 

Note: These reports may vary a bit from Nindicator reports as they may under various circumstances use slightly different calculations.

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