BarroMetrics Views: S&P, An Update 2013-06-20

Pete Steildmayer, whom I consider my mentor, used to say, ‘trend Days  are not good continuation days unless they are the start of new distribution.’

With that comment in mind, let’s have a look at the price action for Wednesday and yesterday.

Figure 1 shows a combined Market  Profile distribution. A trend day (in my terms an ‘Initial Price Movement [IPM]’) began in the ‘J’ period (14:00) on June 19, Wednesday. That distribution completed during the ‘I’ period [13:30] yesterday.

The S&P then started a new bearish profile. The subsequent price action suggests that the IPM has ended and a sideways pattern will now form.

So, we have seen trend consecutive trend days. Is this the start of a move down that will culminate in s September high?

The first thing to note is if we do see a sideways pattern form over today and perhaps Monday, as long as we don’t see acceptance above 1620 (basis Sept), the current IPM down remains intact.

Secondly, what are the chances we’ll see a rally start today?

The first reason is the second Profile pattern. You see a clearly defined ‘b’. The second reason is found Figure 2:  we see that yesterday’s volume may constitute ’stopping volume’.

We can now address the question ‘are we are seeing the price action that suggests  the S&P is on track for a September high’?

If we do see a rally today, the quality of the rally will be a significant clue to answering that question. If we continue another strong day down, that price action will also provide clues.

More on Monday…..


FIGURE 1 Combined Market Profile, E-mini


FIGURE 2 Normalised Volume, Daily, S&P