While the S&P 500 is trading near all-time highs, it is interesting to take a step back and see how recent activity relates to past trading activity. The chart reveals a custom ActivityBar study that shows the cumulative price distribution of the E-mini S&P 500 Continuous Contract (@ES) roughly since 1998, using a volume filter of 50,000. The distribution follows a general bell-shaped curve as may be expected, but notice that there are a number of unfilled areas. In fact, trading above 1,450.00 has been quite choppy with a number of unfilled areas. Three different levels are marked on the chart below (i.e., DT1-3), reflecting potential downside targets where support might be found. These three levels, which may go unnoticed on a regular price chart, come in at 1,633.50, 1,584.50, and 1,512.50. The index remains in an uptrend for now, but if the index experiences a pullback, the discussed levels could come in handy as potential targets.
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Written by Frederic Palmliden, CMT, Senior Quantitative Analyst, TradeStation.