iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
4,121 Blog Posts

Balance and Stability

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:

QM_VolumeP02102015

Before I sandwich the overnight profile into “the blob” to the left of it, I wanted you to have a look:

QM_MP02102015

BALANCE

Meditiation

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Wound Up Tight

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:

NQ_MPVP_02092015_vsSpring

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Settling Unfinished Business

Nasdaq futures are lower as we head into US cash open on a normal amount of volume. Range is also normal but entirely to the downside. The overnight session has a slight trendiness to it. The session opened right where we closed Friday and quickly moved lower. The action took us back to Wednesday’s open gap at 4204.25.

The economic calendar is quiet to start the week. We have a report on Labor Market Conditions out at 10am which is likely a low impact announcement. We also have Fed’s Powell speaking in Washington right at 4pm regarding the audit proposal. Lowes and Masco are both trading higher in the pre-market after reporting earnings. It will be interesting to see how this affects the weak charts on KBH and BZH.

Last week we traded just below our prior swing lower before a sharp buyer stepped in and reversed the auction. We spent the rest of the week exploring higher—eventually reaching upward to the top-end of our intermediate term range. There we found responsive sellers during Friday’s session when price went range extension up, flagged and then fell through the range resulting in a neutral day.

My primary expectation this morning is for buyers to push into the overnight inventory and work up to 4214.50. This is a short term pivot that will give clarity to the morning. If sellers cannot defend in this area then we head higher for a full gap fill to 4230.50 then target the MCHVN at 4233.25 and continue to a stretch target of 4245.75. However, if sellers do defend at 4214.50 then we continue working lower to test Wednesday’s low 4191.25 and target the mCVPOC at 4178.75. Here I would expect to see signs of responsive buying.

Hypo 2 is we drive lower off the gap down and tag 4178.75 early, find responsive buyers who cannot reclaim Wednesday’s range low around 4191.25 and we see anther leg lower down to test Tuesday’s low 4166.50.

Hypo 3 is a robust push higher which fills the overnight gap to 4230.50 early and overshoots it, then another big leg higher up to 4248.75.

These levels are highlighted on the following charts:

NQ_MPVP_02092015

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A Little Oil Pocket

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:
QM_VolumeP02092015

QM_MP02092015

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Know What To Chase

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:

NQ_RANGEBOUND_February2015

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.

Mutumbo_February2015

Subs, the 13th Weekly Strategy Session is complete. I can assure you it isn’t spooky. There are some cool opportunities setting up. Enjoy.

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Non-Farm Friday

Friday is upon us and after 4 days of upward price movement traders are wondering if Friday will see some selling. The overnight session was quiet and balanced ahead of the 8:30am NFP data. After a strong set of numbers and revisions prices went higher-lower-higher on third reaction analysis. Range and volume managed to maintain a normal 1st sigma range and volume. Fed Plosser was speaking this morning, saying the FOMC is at a point where they are nearly forced to raise rates soon.

Coming up today we have Fed’s Lockhard speaking at 12:45pm and Consumer Credit stats at 3pm.

Yesterday we printed a normal variation-type day. Price was gap up to start the session and sellers pushed us down through Wednesday’s volume pocket to the mCLVN at 4214.50 where responsive buyers stepped in and took us up through Wednesday’s high. Sellers were unable to complete a full gap fill down to 4204.25 thus it remains open to the downside.

The normal variation resembled a P-shaped short squeeze before making a second leg higher in the afternoon shifting the shape almost into a double distribution trend. The action put us up into the range of 1/26. The full gap fill up to 4269.25 is still open. There is also an interesting LVN at 4260.75.

The auction tends to become a bit rough after 3-4 days of unidirectional movement. Therefore early on I am expecting sellers to push into the overnight inventory to close the gap to 4249.25. From there we may see responsive buyers initially but they cannot take us up through 4260.75 and we see another leg lower to take out overnight low 4245.50 and target the MCHVN at 4233.25. Stretch target is a Wednesday gap fill down to 4204.25.

Hypo 2 is buyers gap-and go to take out overnight high 4263.50 and close the gap up at 4269.25. Responsive sellers struggle to re-enter Thursday’s range ~4253.75 and we continue higher to target the MCHVN at 4285.25.

Hypo 3 is 2-way chop with slight buyer edge with range between 4240.50 and 4270.

These levels are highlighted below:

NQ_VolumeProfile_02062015And here are the market profile levels and structures I am working with today:

NQ_MP_02062015

 

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Oil Wrestling With a Former Level

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:

QM_VP_02062015

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Thug Life

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.

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Completion

Volume and range expanded to 2nd sigma overnight suggesting the session was slightly abnormal. It started off with a secondary completion wave after the market experienced an encompassing wave of selling at the end of the trading session. The secondary wave pushed through overnight and exceeded yesterday’s low and pushed deep into Tuesday’s range—trading down through the volume pocket we printed on that day before finding strong responsive buying.

Once the auction reversed higher it continued doing so, nearly uninterrupted, up to now, where we are trading about 20 points higher from yesterday’s close. At 5am Fed’s Rosengren was giving an early bird lecture on Sovereign Risk (apropos), at 7am the Bank of England rate decision and Asset Purchase Target numbers came out inline (brought buyers into the NQ), at 8:30am we had Initial/Continuing Jobless Claims and Trade Balance. At 10:30am we have Natural Gas Storage change stats for January.

Prices are higher over a 2-3 day stretch after oversold conditions. We are trading on the high end of a 7-day value range. We are also trading just below the gap zone from 01/26 (last Monday) but we have not yet closed the range gap. Yesterday was a neutral day with a double volume distribution. Intermediate term we are neutral-to-slight-bullish.

My primary expectation this morning is for sellers to push into the overnight inventory and try to fill this gap down to 4204.25. The volume pocket from 4220 to 4209.50 will be an interesting reference point for gauging their success. If they can push down to 4214.75 my expectation is elevated that they will trek all the way through to 4209.50 and a gap fill to 4209.25 where we find responsive buyers.

Hypo 2 is a balanced 2-way open with buyers defending the volume pocket ~4220 setting up for a test of the crime scene at 4242. If they do not find responsive selling then take out yesterday’s high 4243 and work up to the range gap 4246 then a stretch target of full gap fill 4269.25.

Hypo 3 is we grind slowly into yesterday’s volume pocket (4220 – 4209.50) and spend much of the session “filling it in” with 2-way chop.

These levels are highlighted below:
NQ_VolumeProfile_02052015

And here are the current market profiles:

NQ_MP_02052015

 

 

 

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Value on The Move in Oil

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:

QM_VolumeP02052015

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