Almost six weeks ago I wrote an article for Trader Planet setting out a target for the S&P futures at 2082. It was an ‘easy’ call because Volume Profile had formed a very significant shelf at that level: the Volume Profile Point of Control. Price gets magnetized back to such high volume zones and in this case it made an overshoot.   

Ten days ago I did a follow up on the S&P, opining that the overshoot was bullish. In fact, I was expecting the S&P to make a new all-time high, but alas it was not to be.

I noted in that article that the Volume Profile Point of Control was now key support, a line in the sand (see inset). The testing of that floor went on for several days, but the hefty bounce on 11/6 was decisively reversed on Monday 11/9. That day marked the change of character for the S&P 500 from presumed bullish to doubtful.

Reid-ES-11.15.15.png

I don’t think the bears have the market in a choke hold yet, but the Nasdaq 100 could easily fall another 100 points. The good news, however, is that the S&P has important support right here at the Lower Value Area (LVA), the dark green line on the chart (2011). I consider this level an important “line in the sand.”

Therefore, I’m looking for a gap down in the S&P on Monday and then a decent bounce, even in the face of the recent waterfall decline. Of course, if that key level (2011) is taken out and given a brusque kiss goodbye from below, then Monday could get nasty. Either way, it will be an interesting day. 

 

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