The Precise Take – Expecting consolidation today

Time Profile:  For days on which the prior day closed down 2% or more, the Time Profile for the March rally (page 2) suggests a bullish bias throughout most of the day, with the final 45 minutes going either way.  However, the Time Profile going back to October 2007 (market top), for which we present down to the 15 minute level, has mainly a bullish bias only in the first 15 minutes (possibly because of gap ups) and from 2:30 to 4:00 pm.  If we are indeed beginning a material market correction, the Time Profile for March 09 onwards may be less relevant than the longer term one.

Trading Today:  Yesterday, the ES reached our first downside target, which was the highest volume market profile point of control (995.25), and which was the low of the day.  Overnight, the ES has traded below this level and we expect oscillation around it today. Accordingly, there should be a range day with maximum low of 984.00 and maximum high of 1006.50.  FOMC minutes are released at 2:00 pm today.  With the Fed making fewer waves on announcement day and, instead, electing to make policy changes outside the meeting (such as yesterday’s Agency and TALF announcements), the minutes could be more important than the actual announcement.  However, we don’t expect the same volatility in the markets as on…

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