The Precise Take – Continued overnight weakness – will the day session get follow through?

Time Profile:  Today, the Federal Reserve Bank of New York conducts permanent open market operations (POMO) for Treasury securities.  The POMO tape-painting effect has all but disappeared, as evidenced by the charts on page 2. While the noticeable edge was a bullish first hour in July, August reversed the trend with a bearish first hour, mainly due to opening gaps.  Today, we expect an opening gap to the downside, continuing the August trend; however, we can offer nothing more as to the balance of the day from the Time Profile alone.

Trading Today:  Overnight, the ES filled within a tick the market profile volume gap that extended to 1010.50 after selling off at the September 09 contract’s highest point of control at 1025.50.  We would be sellers on an early retracement to the daily gap/pivot area of 1018.50 to 1021.75.  We would also sell a spike high and subsequent reversal on the 10:00 am reports as long as…

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