iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
4,011 Blog Posts

Into The Gap

Index futures are trading up a bit premarket, CPI data just came out in line with expectations and brought in a bit of selling, however we still have almost an hour before the market opens.  Traders may have their eyes set on Wednesday, the day we are scheduled to hear from the primary market movers—the USA Federal Reserve.  They will be releasing the minutes from their July meeting at 2pm on Tuesday.  Before we open for trade Wednesday we will be receiving the Fed minutes from the Bank of England.  With earnings season winding down, these type of economic events will be what prompts movement in the markets.

The intermediate term volume profile has taken the shape of peaks and valleys one might expect when price discovery is underway, and that certainly appears to be the case.  The market is searching for sellers as the auction rolls upward.  The pace began to slow yesterday afternoon, however we did not find a selling response significant enough to be begin the process of balancing this timeframe.  Instead we are buyer controlled.  Price stalled at my first measured move target, however these prices are by no means science, they are merely Fibonacci extensions of our prior swing dated from 07/24 -to- 08/07.  It does tell me yesterday was a stop run because essentially this price level is where intermediate term short sellers might put their stop loss orders in.  If we exceed the second Fib level at 4030.50, and see acceptance, this market can go much, much, higher.  I have noted these levels and other intermediate term prices below:

08192014_IntTerm_NQ

Supporting the idea of a heady rally is the very long term perspective seen on the weekly Nasdaq Composite where price breached the 14-year-old gap I have been discussing.  The Nasdaq Composite is just an index, thus we do not have volume profile to observe, but the gap suggests similar behavior may occur.  This gap has over a 60 point range to the upside, see below:

08192014_Weekly_NQ

Here’s the snapshot I posted last week if you want to reference the gap:

08112014_Weekly_NQ

Yesterday we printed a P-shaped market profile which suggests a temporary phenomenon known as a “short squeeze” occurred.  When this formation occurs after a two or three day snapback rally inside an intermediate term downtrend it can often mark the end of the rally, a final squeeze before returning to the bigger trend.  However, in this case, where we are making new contract highs to start the week AND where we gapped higher, it does not carry the same implications.  It does tell us a squeeze occurred early in the session.  It does tell us fresh risk was initiated by buyers during the day, and it does tell us sellers did not enter the market in a meaningful way.  I have highlighted the prices levels I will be monitoring, as well as a few other observations below:

marketprofile_08192014

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8 comments

  1. Raul3

    Primary Hypo- sellers push into overnight inventory, test down to yesterday’s VAH at 4018.50 before finding responsive buying back up to test overnight high at 4028 and if acceptance above overnight high then work toward measured move target of 4030.50

    Hypo 2 – gap and go drive higher, take out overnight high at 4028 and measured move target 4030.50 early and continue driving higher into the composite gap zone “14 year gap”

    Hypo 3 – sellers push early, take out Vah at 4018.50 and push a full gap fill down to 4014.25 before finding responsive buying. Sellers hold VAH at 4018.50 and push again to test Val at 4012. If they do not find responsive buying then they are likely to target a test of the 4000 millennium mark

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  2. Sooz

    time to get the party started..
    you know the ticker..was an easy pop/drop last week. yes, it was.
    Since I accumulated an XXL position spec…I am taking a bit of profit here. selling 1/4 position. (+20.82%)
    Status Filled at $3.8306
    Symbol ARO
    Description AEROPOSTALE
    Action Sell
    Trade Type Cash
    Market Session Standard
    Order Date 08/19/2014, 10:49:23 AM ET

    remain long at extra cheap posted entry right here on the Fan~tabulous Sir Raul’s blog..
    Disco Duck is making a move,too..another add back/trade core oldie fave.
    😉 ))
    Crazy busy week around this joint. My beautiful sister is flying in from So~Cal this evening and staying for a month..yeow! <—(sorta bad timing there) Also, I'll be moving two of my three off to college..(emotional wreck..Truth!!)
    🙁
    Have a great day all you Beautiful People.

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    • Sooz

      easy peasy ARO squeezy
      Short Interest as a % of
      Shares Outstanding*
      29.46%
      You must know that I look forward to hopping back on to share my thoughts in the near future..in regards to Mr. P..yup!
      Then again..maybe I’ll decide to take the high road on this subject.
      haha

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    • Raul3

      Sooz, your kids have to be so excited to head back to school. Exciting time no doubt about it. Nice work out there, keep it up 🙂

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      • Sooz

        ya..pretty crazy time around this joint! I’m Just bummed that this summer and the last 20yrs, for that matter, went by much too quickly. Jeezus, it seems like yesterday they were just tots.
        Very excited for the Irish triplets (20~19~18 yrs. respectively). Not to sound stoopid corny but being their mom has been and continues to be(forever) truly the greatest gig EVER!! Very lucky..indeed.

        Heading to Bloomington IN tomorrow through Thursday and then back home to pack up and head down to East Lansing on Sat.. My youngest will be a senior at swanky Bham high..
        😉

        Thanks Sir Raul..
        hey congrats on your cameo with OA sessions. Very Great!! Sorry I’m not a member. I’m not so good at that sort of stuff. (chat rooms and such..)
        May you have continued appreciation for all the work that you do here everyday.
        ~Huge Respect
        don’t ever underestimate(at any level..comparatively speaking) your talent.

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        • Sooz

          Disco Duck is dancing again today..
          I’ve traded around this little fella for 8 yrs..
          it’s been good to me, Sir Raul.
          DSCO scoop $1.55 Acquired 08/04/2014 (did not post entry/buy back.. sorry about that.. not posting too many trades around this joint..just because(?)..all about respect..yes sir )
          $ 1.55 is key level going back many yrs.. just saying.

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