BarroMetrics Views: S&P March 23
The S&P last night made a new high and for the first time in months, made it on normal range and volume based on this run up. But that is not to say all is perfect with the move up.
Negatives:
- My sentiment services (Sentiment Trader and Whisper Numbers) have the S&P overbought.
- While the breakout was on normal range and volume for this run up, on a historical basis, the range and volume are just below normal.
- The US$ went up at the same time as the S&P went up. Is the inverse correlation over? Or will we see tonight either a US$ or S&P decline?
The good news, there is a smaller than normal risk on any long trade: last night offered a tight stop location.
FIGURE 1 shows an end-of-day price trend i.e. a strong price movement that extends the range of the day no less than 33%. In this case, the D to K range was 7 points and the L to M range was 6 points. So the LM range extension qualifies as an end-of-day price trend.
Now, if this market is truly strong, we will not see acceptance below the starting point of ‘L’ (1064). So, below 1064 is a nice place for a stop.
In addition we have a ‘Failed Auction’ at D i.e. a single print at one extreme of the Profile that is followed by a range extension. This means we should see the market trade down to 1159 with 5 trading days. If we don’t see 1059, this means we have a strong market.
But if we do see 1059. I would call it a failed breakout and would go short at 1059 should we see it on or before April 30.
FIGURE 1 Market Profile S&P
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