On Monday the S&P consolidated Friday’s gain in a healthy manner. 2100 is now support. If you look over at the Volume Profile chart you will see a low volume node (valley) at that price. Interestingly, low volume areas can and do act as support.

How so? Think of it this way – few want to transact business there.

2120 is the next target for the S&P, followed by 2140 and, I expect, we will ultimately get to 2164. If the 2164 level is attained in March, it would represent a time and price convergence that is likely to mark an intermediate term top.

A Note on Volume Profile

The histogram on the left side of the chart shows the volume distribution in the S&P futures for different periods of time. Key support and resistance levels are indicated by the peaks and troughs.

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