The opening swings this week were choppy and indecisive, but from them emerged several clean auctions.  As the week progressed more and more opening swings piled up before we ultimately came into balance ahead of the weekend.  Below you can see how the daily auctions played out relative to the opening swings and also an update to the intermediate term auction:

MONDAY:

TUESDAY:

WEDNESDAY:

THURSDAY:

FRIDAY:

INTERMEDIATE TERM VIEW:

LAST WEEK’S AUCTIONS PER THE MARKET PROFILE:

24 HOUR PROFILE SINCE THE MONTH STARTED:

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The sellers sat back and waited for higher prices this week. Once they had prices they deemed unfair to the upside, they came into the market in droves. Thursday and Friday successfully unwind steady bull progress. However, there is still potential for buyers to turn the market around according to my intermediate timeframe analysis. For now, here are the weekly opening swings and also a week of market profiles. Enjoy:

MONDAY:

TUESDAY:

WEDNESDAY:

THURSDAY:

FRIDAY:

THIS WEEK IN MARKET PROFILE:

 

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We continue to observe the Nasdaq opening swing over here.  As always, your thoughts are appreciated because the more we discuss, the more we learn.  Thank you Zen for writing an anecdote of sorts last week.

Some notes, less noise.  Have a look:

MONDAY

 

TUESDAY:

 

WEDNESDAY:

 

 

THURSDAY:

 

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I started live trading the first range extension after the opening swing is printed.  I was using a DOM for trade entry and I immediately remembered why I dislike the DOM so much.  It is a very distracting tool, in my opinion.  The market is noisy enough as it is.  When you add the flickering of this device into the mix trading becomes even more obscure.

I will continue testing the strategy next week and I am setting chart trading up over the weekend.

One of my observations from trading this setup live is how incredibly fast it happens.  I can sit here in retrospect and circle the idea, but the live environment gives you seconds to get your entry in.  Also, the trade can take immense heat in seconds.  Without a rock solid plan and execution, this high probability scalp trade is destined for failure.  It appears the best approach is a limit order set in place beyond the opening swing on the chart.  Then as price exceeds either extreme your entry is hit and filled.

I thought the overlapping of opening swings on Tuesday/Wednesday was an effective piece of context.  I was a buyer of swing longs against it.  However, the prices did not hold off sellers who cut through them with a slow grind lower.  I am so familiar with being on the right side of the slow grind.  Usually sell flow is much more knife-like.  Anyhow I found it odd and powerful to be on the receiving end of a grinder (Thursday afternoon).

The infamous Elroi can be seen on my charts today.  He has been getting chopped up pretty good during the opens.  I have always found his signals to be more potent later into the session but I like to see the signals because they give me insight into how other algorithms are performing.

Here are this week’s opening swings in the NASDAQ.  Feel free to share your thoughts and observations:

MONDAY

TUESDAY

 

WEDNESDAY

 

THURSDAY

FRIDAY

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These last few weeks have been as risky as any I have ever seen for momentum trading.  The NASDAQ has been suggesting this environment via large ranges, big overnight gaps, and harsh periods of selling.  Through all the difficult market conditions for stocks, you can still see a clear auction taking place in the futures.  The reason for this the natural forces of a marketplace.  I strongly recommend anyone who speculates establish a firm grasp of auction theory before applying their own layers of technical analysis, risk management, statistical arbitrage, or any other strategy you prefer.

The opening swing is an important piece of the auction.  It sets the initial range which buyers and sellers can use as reference points for their buying or selling campaign.  I have a rule that says I cannot take any trades until at least one of the opening swing levels has been established.  It does not take long, but it gives you the first bit of fresh intraday data to measure your trade against.

Thursday morning we printed an opening swing inside of an opening swing from earlier in the week.  I saw this same occurrence last week here http://ibankcoin.com/raul3/files/2014/03/NQ_OS_03262014.jpg

I affectionately refer to this tight buildup of pressure as The Doppelgänger for reasons outside trading.  I was in literally the strangest meeting of my entire life when this all went down Thursday.  I returned to my desk and found my book tossed into a massive inferno.  But there was really no word more capable of describing the condition.  Therefore you may see me reference The Doppelgänger going forward.  And it will be interesting to see if it continues to play out because it represented a huge opportunity the two times we have seen it. Riding the trend that explodes away from it offered 3 trades with tons of meat.

Without further adieu, here are this week’s opening swings and my observations of the opportunities they create as well as the risks associated with said opportunities:

MONDAY:

TUESDAY:

WEDNESDAY:

THURSDAY:

FRIDAY:

 

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Opening Swing is an ongoing series where we review the opening swing for each day of trade in the NASDAQ futures and the effect these price levels demonstrate on the subsequent price action.  We also look at tradable opportunities and discuss the risks involved with these trades.

The opening swing is the price range established right after the market opens.  There are orders called Market On Open (MOO) orders which execute when the market opens.  The opening swing is not timed, but rather the push in either direction from these orders.

I began writing this series at a very interesting time in the market.  Many of the traders I respect and follow foreshadowed 2014 to be a year of increased volatility and as soon as it hit in mid January I began formulating thoughts and testing strategies to capitalize on the wider ranges volatility offers.  I chose to focus on the NASDAQ because it offers a wider range to trade then the S&P and also by monitoring the index I have an indication of the pressures existing on most of the stocks I trade.

Most of my notes this week are embedded in the images, so click through them to see some very interesting market activity in and around the opening swing.  There were some fantastic tradable opportunities this week.  As always, do not hesitate to discuss these strategies and share any inputs you may have.

For additional insight into the overall context from each day you can review my morning context reports.

MONDAY:

TUESDAY:

WEDNESDAY:

THURSDAY:

FRIDAY:

 

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Opening swing is an ongoing series where we review the opening swing for each day of trade in the NASDAQ futures and observe and discuss tradable opportunities.

The opening swing is a high and low that is set by the initial auction right after the market opens.  It is independent of time and is not the same as the opening range or initial balance.  The opening swing is the high of the first push up and the low of the first push down or vice versa.  It measures how far the Market On Open (MOO) orders take the auction right after the open.

This week is an interesting week to observe because we saw some big intraday moves as we grinded into option expiration.  One of the interesting characteristics of Monday and Tuesday was the inability or impatience of the market during the opening swing.  It seemed as if no MOO sell orders existed and the auctions were unable to set opening swing lows.  Instead price would set an opening swing high and then continue driving higher.  These were opening drives and without proper understanding of them a day trader can go bust rather quickly trying to fade them.

Wednesday presented the trade idea I have been envisioning, and it even came on the short side which was a bias I had for intraday trades this week.  Soon after the opening swing high was printed, too soon after, the market attempted to trade above opening swing and was quickly rejected.  It turned out to be the high of the day and if properly executed then all a trader had to do for the rest of the day was scale profits at logical price levels (like opening swing low, market profile levels we discuss in the mornings, etc.)  The influence of the opening swing levels was very clear Wednesday and was all the information you needed to properly trade the inaugural discussion from Janet Yellen.

Toward the end of the week, it was interesting to see how prior O/S levels affected trade.  I have already gotten too wordy.  Check out this week in the NASDAQ from the view of the opening swing.  If you are as eager as I am to trade this auction action, be sure to compare each day’s opening swing to my morning market profile report for a comprehensive view of live auction theory application.

MONDAY:

 

TUESDAY:

 

WEDNESDAY:

 

THURSDAY:

 

FRIDAY:

 

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Welcome to Opening Swing.  This is the first of a series of analysis on the behavior of price during the first few minutes of trade, and the subsequent trade that follows. Initially our attention will be on NASDAQ futures because I think we will see more volatility in equity prices this year and I view index futures as a smart vehicle for playing this potential.

The opening swing is a high and low that is set by the initial auction right after the market opens.  It is independent of time and is not the same as the opening range or initial balance.  The opening swing is the high of the first push up and the low of the first push down or vice versa.  It measures how far the Market On Open (MOO) orders take the auction right after the open.

The plan is to use less words and more charts, but if any of these charts begin showing a similar trading picture or tradable opportunity, my plan is to discuss it and hopefully solicit some input from some of the more seasoned traders hanging around these parts.

Without further adieu, let’s look at this week’s NASDAQ openings swings.  They are presented in chronological order and free of any indicators, moving averages, etc.  This is pure auction analysis.  Keep in mind, the context analysis done every morning gives more insight into to these opening swings, and combined form the basis upon which we can consistently trade for profit.  Therefore it would be of your benefit and mine to take each opening auction and compare it to my morning context report to form a solid understanding of the early auctions that take place.  Again, don’t hesitate to use this forum to ask questions or suggest methods of trading this auction behavior:

NOTE: Most days I report the opening swing inside 12631.  I like using 12631 not because I want to be exclusive from all the wonderful people I learn from and interact with on Twitter, but because the chart room has so many dynamic tools that I can use to review my messages.  12631 members can review my live opening swing calls (as I will be) to see how accurately I am calling the opening swing in real time.

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