When the anatomy is balanced to the core it becomes a very stable entity. As we fill in this volume pocket [shown below] oil is demonstrating a high level of balance:
Before I sandwich the overnight profile into “the blob” to the left of it, I wanted you to have a look:
BALANCE
We started the week with my favorite profile print, the neutral. It serves to bring the buyer and seller close in their perceived value of the market. We tested lower after initial balance (first hour of trade) and the order flow was absolutely benign. BOING! We go higher. We range extend higher from the initial balance and the order flow was absolutely trite. PEW! We go lower [sound effect sold separately].
Then the day ends somewhere in the middle, pure to the Neutral name. And this neutral, at least on the Nasadq, was the fourth occurrence in the last five sessions. We are really on to something here, mates!
Here me now: this range is real close, like 0-100 close, to being left in the dust. Nasdaq is right in the middle, my book is leaning long, but I did throw on a hedge via SKF because one can never be sure. This instrument was chosen because of the ominous candle print Friday on XLF. It could mean nothing.
Closing thought—look at the Nasdaq market profile next to this spring:
Heading into the week oil is sitting in a low volume pocket on its microcomposite, and if you look at its market profile it is in a solid balance formation.
Looking for choppy 2-way action in the commodity with a slight edge to buyers, see below:
Hopefully you’ve had a nourishing February weekend, for on the horizon is another week of trading within the confines of our range. You know a range is mature when it becomes this loaded with reference points:
If prodded for a prediction, then I would look for strength early in the week which picks up steam Wednesday morning at 10am and perhaps sustains even through the afternoon. But Thursday any chaser is promptly served with a carnival hammer to the head, and back into the range we go.
Subs, the 13th Weekly Strategy Session is complete. I can assure you it isn’t spooky. There are some cool opportunities setting up. Enjoy.
Comments »
Interesting how this former naked VPOC at $52.60 is serving as a roadblock this morning. Price went just above it and found responsive sellers. Below at $51.05 is an interesting area as well.
Those are the pivots I will be eyeballing today in oil:
Remember the good days. When you have a solid performance, in any endeavor, and make no mistake trading is a performance, you will benefit from extensive journaling. Reflect on your emotions, how you were able to observe them (are you able to observe them?), whether you were able to channel them, and what sort of results you had.
Today is the type of day that reminds me why I am passionate about trading. I haven’t felt giddy in weeks. It’s okay to feel giddy but you do not want to act upon this feeling—the consequences can be more drastic than fear-based behavior.
You don’t want to block these waves of energy out either. This method can work most of the time, but when the pressure is at its highest you’re likely to crack, and death spiral. Or worse, crawl under a blanket and assume the fetal position—the proverbial deer in headlights.
Trading is going well, my systematic approach of manufacturing wins is simple to understand and its repeating across several assets. However, much like after I experience a large losing day, I am returning to one of my favorite routines. This evening I will clean like a psychopath and pump iron until my hands can no longer grip the dumbbells.
Tomorrow carries a heavy weight on overall sentiment. Many months have been brutal, January was brutal, and this first week of February has been mild. Will NFP return us to our regularly scheduled brutality? Stay tuned.
Comments »The recent flurry of activity in oil managed to shift the volume point of control (noted as a VPOC line on the chart) higher. This suggests that the upward price discovery process is showing success. When value moves there is a more sentimental shift in the perceived worth of something as opposed to just wild price discovery/movement.
Also, note how price went and tagged the former VPOC overnight and saw a sharp reaction. There not only are other time frame (OTF) sellers in this market, it’s not attracting buyers of a similar cloth as well:
One of the recurring life lessons, one that comes with lesions and ego bruises, is that something too good to be true is usually a lie.
Neutral days by their nature are balanced. They like to revert back to the mean before they ultimately travel elsewhere. That’s what made today so curious—it through about reverting but could not penetrate the initial balance. Thus we were left to explore higher prices late into the session.
Then buyers pulled their favorite power move, the ramp. A flurry of buy programs hit the tape, sellers backed off, letting the bulls have a position of perceived control. They created space and then lurched with mystical speed at their prey.
One of the hardest parts of fading the second range extension is timing the entry. My early attempt, and it went okay, was around 4225. It never stuck though and I abandoned trying to short. While unfocused, taking in the late day ramp and providing some banter to Twitter, the market came right up to a level I scouted weeks ago—a high conviction level—and I missed it.
E.R.R.O.R.
It’s okay, but if you think these market profile levels are just your old buddy Raul throwing darts, hopefully today can help persuade you otherwise, for your own benefit not mine, mates:
Listen, you and I both know the sovereign health of Europe and Greece doesn’t matter THAT MUCH. They don’t matter 40 Nasdaq points, right!?
Wouldn’t you rather have something more tangible to justify a move with? Neutral profile, day 3 unidirectional, NFP on Friday, oil down a hot 8, etc. etc.
I could go on, but this post already is too long. Instead soak in this tasty hit:
Comments »If you talk to traders in the small circle of market profile theorists they often say neutral days tend to follow one another. However, if you do a statistical study of the catchy saying, spoiler alert, it only happens 20% of the time.
Today is a one-in-five instance, a rare sighting indeed. Fun to see such behavior as we set our eyes on Friday’s NFP announcement. The quirk to yesterday’s neutral day was it closed on the upper extreme, will today’s do the same? If yes, and you are net short, you might want to gird your loins because I reckon that 2 rare neutral extremes in a row is some kind of omen.
Oil, as you likely have been told numerous times, gave up a good chunk of its progress off the lows. How much? You may ask, if you’re nature is one of curiosity.
So far about half, so chill baby.
I have work to do into the bell. Godspeed mates.
Comments »Oil made a big move so far this week, and as this morning’s session pushes onward it is trading lower. We have Inventory stats at 10:30am. If the sellers are to strike hard, they’re likely to show their hands around this time.
Note how we tagged the value area high from 01/01/15 to the tick then found sharp responsive sellers:
