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Market Analysis - 2/12/2016

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The charts below and associated notes reflect my view this morning.


Chart 1. The S&P March futures contract (ES H6) - The blue pattern is an unfolding bullish CRAB possessing a PRZ of roughly 1715-1720. The classic pattern is an inverted cup in search of a handle. The bounce off Thursday's low is most likely the handle. A break below 1802.50 should seal the deal for the bears.


Chart 2. The S&P 500 ($SPX) - This is the 'cash' version of chart #1. The bullish CRAB has its (very tight) PRZ at 1728/1729, roughly in line with the February 2014 low. 


Chart 3. The SPDR S&P 500 ($SPY) - The 'ETF' version of chart #2. Again, a bullish CRAB and a corresponding PRZ as tight as they come, namely, ~172.50.


Chart 4. The SPDR S&P 500 ($SPY) - The weekly chart emphasizes the importance of the ~181 price level. Yesterday's low was the fourth attempt at taking out TDST Support at 181.44. Every attempt makes it that much more important. Should price close under this level in the coming days, the bears will likely press even harder.  


Chart 5. The SPDR S&P 500 ($SPY) -  Yesterday's session counted as TD Buy Setup bar #6. In order to keep this TDST Setup series intact, Friday's session must close below 185.42. There's an open gap at 185.27.


Chart 6. The S&P March futures contract (ES H6) - The market profile chart depicts this week's auction and its corresponding developing vPOC at 1847. The developing HVA (high-volume area) has its upper boundary at 1850. Should price take out this 1850 level, refer to chart #8 for the identified patterns and related price objectives (PRZ).


Chart 7. The SPDR S&P 500 ($SPY) -  Again, the market profile chart depicting the developing weekly auction. The developing vPOC is at 185.20, and the HVA's upper boundary is at 185.40.   


Chart 8. The S&P March futures contract (ES H6) - Two harmonic patterns have been identified on this 5-minute chart. A bearish BUTTERFLY and a bearish BAT. The BUTTERFLY has its minimum PRZ just two points above the weekly (developing) HVA's upper boundary at 1850 (see chart #6). However, a move above 1852.50 should target the BUTTERFLY's PRZ extreme at 1858. Keep in mind that Friday's price action is often unpredictable, aiming to hurt those who overstay their welcome. Hence, an extended short squeeze could easily bring the BAT PRZ into focus. Resist the end-of-week temptation.

Trade smart,

 Peter 


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