I’m looking for some responsive selling off the open, looking for sellers to present themselves at the 1552 level. However, the last two days and the erratic pumps higher show greater risk of being steamrolled if short. A caution long bias or cash are the best positions.
Tue Mar 19, 2013 8:24am ESTComments Off on The Bull Foot(hoof)print
For me, the time when we’re trading within the range of a previous auction is where my edge is the sharpest. The reason being I can get close to the action and laser focus on where participants have made themselves known. With that in mind, and to tune out unnecessary noise, today I present only the previous two sessions of trade.
I’ve highlighted below what can only be described as an aggressive reaction by the buyers. They woke up Monday with the futures bouncing off their Sunday lows and they came to the market with buy orders. It wasn’t until we reached Friday’s value area low that the flow of sell orders was enough to stop the liquidity march higher. The afternoon attempt to dictate price lower by the sellers was shut down, and another aggressive buying reaction footprint was left on the profile.
Should the buyers not behave in the same manner at the levels highlighted below, that tells me something has changed. What has changed? Don’t care bro, something. The sentiment of the buyers has changed in a material way and they’re backing off their bids.
Up above, the sellers cleared were a greater force and stopped price in its tracks. Keep in mind, however, that this was after a 14 handle intraday rally. Today is a big POMO day with $2.75 – $3.50 billion in outright Treasury Coupon purchases (source: ZH). Should all that liquidity find its way into equities, we need to closely monitor price behavior within last Friday’s range and act accordingly.
Mon Mar 18, 2013 8:24am ESTComments Off on Turbulance
We’re heading into some turbulence this week, with the S&P futures gapping down over ten handles. The overnight session saw price over 20 handles lower before buyers stepped in and stabilized price. Since around 2:30am (near the European open) we have seen the price of the index rebound 10 handles.
My profile is looking haggard because the contract data did not roll properly from March, so it may be a few sessions before it’s all cleaned up. However, I do see 1544.75 as a key level for bulls to recapture if they intend to assert control of the tape. Otherwise, I expect to see consolidation type trading where we recheck some past levels for significance (see if they become support).
Wed Mar 6, 2013 7:54am ESTComments Off on Peeling Yesterday Open to See What Today May Bring
Good morning mountain climbers! We’ve awoken to another green globex session, as the market continues its march to new highs. Overnight the session peaked out at 1544.25 and as we press through the mid-week the ball is firmly in the bull’s court. It’s important they remain in control at these elevations, perhaps a gap-and-go situation otherwise sellers could target a gap fill back to Monday.
I’ve cut my profile chart down to the last two sessions only now that we’ve poked above the range battle that occurred over the last few weeks to get my eye closer to the action. On the surface, yesterday looks like a balanced session with a smooth bell curve as the result. Peeling it open, we see a gentle roll occurred throughout the session, with what looks like profit taking from longs into the bell.
The big gap below is cause for concern. However, given the context of our trend higher it poses less risk of filling. I’ve market a few levels I’ll be keying off of today on the chart. It wouldn’t completely surprise me to see the lows get taken out to shake out a few longs before we continue the day unchanged or higher.
Good morning to you! We’re waking up to mildly green futures this morning, mildly green as we once again stretch our reach toward the peak of “momo-mountain”. The terrain is jagged up here and it looks like our only way out of it is up, up, and away, like He-man. Or Super Man.
There’s something important for me to address today, and that’s the big long exposure I have. You see, I only have today and tomorrow morning to decide what to do with my positioning before I head deep into the jungle. That’s right! Raul is taking this show on the road baby! And why the hell not, we make all of this money for a reason, and that’s to LIVE!
The timing of my trip is in alignment with future traders rolling over to the June contract. Once you begin trading futures, you’ll get a feel for the mild frustration that is rollover. I personally don’t like the rollover period whatsoever, so I figure pare that with the sub-arctic weather canvassing the north, it was a perfect time to hit the high heat, high humidity.
Enough about my escape, let’s look at some important developments within the daily auctions. The globex session pushed the market to fresh highs, peaking out at 1530.25 and I don’t have much to cue off of above that level. It’s open air, trade accordingly.
Below I’ve only noted the key zone that needs to hold. Things get VERY slippery below there and it’s a major blow to confidence. Should we sustain trade below there, I’m cutting back big time, keeping only my ace names, NAMES LIKE CREE, who took it upon themselves to make Edison’s stupid incandescent bulb and that goofy squiggly CFL OBSOLETE! Adios bad tech, hello good. Tesla is a smiling mass of electrons somewhere today.
Bottom Line: Raul is heading into the jungle and will bring it to you live. The only way out is up. The profiles point to higher prices. Thomas Edison was a corporate hit man.
Mon Mar 4, 2013 7:59am ESTComments Off on Making Jungle Preparations
Smooth trend higher has given way to choppy, indecisive action. The resulting daily candles for the S&P are long bodied. By looking at the profile, we peer inside the candle and see the footprint left behind by the buyers and sellers.
The globex session spent Sunday and early today slowing gliding lower until recently when a six handle spike effectively erased all of the losses from the prior action. As we approach the 8 o’clock hour, price is bumping up against the 1516.50 level which is also the VPOC from Friday.
The first observation that jumps off the charts is the P-shaped profile that formed on Friday. The structure of the auction suggests early action caused shorts to cover their positions which fueled the rally higher. However, once they were done being squeezed, no new business entered the market and initiated new longs. Often times we can interpret this type of action as a temporary phenomenon, which once completed results in price continuing lower. However, given the context of Friday, going into the weekend, and the uncertainty surrounding the sequester it makes sense that buyers were not aggressive in initiating new longs into the weekend.
I’m respecting the notion that we may trade lower, and with that in mind, I’ve tightened up my bias line below. Should we see price trade below these levels, especially toward the end of the session, I will look to reduce exposure to equities across the board.
I’ve also traced out the progression of value over the last several sessions. It highlights the progress sellers have made and how we recently stalled out. Value placement today can either negate the recent progress of the sellers or confirm it. I don’t see room for much else but I suppose we could see a tight value placement again today.
The sellers went to work into the close yesterday and continued their onslaught overnight driving price to new lows as I write. I’ve also been axed from the iBankCoin roster. And this morning, when letting my hounds loose to bark at the schoolchildren one doggy caught her ear and spilled blood, literally, everywhere. I’m off to the vet after this.
The way we’re all overreacting you would think something bad actually happened yesterday. Yes we gave back some gains, but nothing is lost. We may be entering a bracketed trade for now.
Here are some important levels to keep in mind as you sashay through your gay day:
Thu Feb 28, 2013 8:30am ESTComments Off on Busting Loose
Here we are, at the end of a short month and what a ride it has been these last few days of business. Things certainly have busted loose in the indices, where we’re seeing the largest ranges of the year. This type of volatility makes for a higher risk/reward environment. With that in mind, it’s important we have levels in mind as guideposts to the overall context and stance of market participants.
Clearly the most important level to keep in mind today is 1516. This price level is the confluence of the selloffs VPOC, yesterday’s rally VPOC, and where we closed out the session. Both forces have made themselves known near this range, and who wins out the battle going forward gives us insight into who is best dictating the direction of this tape, the buyers or the sellers.
I have a close target to the upside at 1522 because I’m giving sellers the benefit of the doubt since they’ve managed to string together a lower high, lower low. If you can hammer lower high lower low and vice versa into your mind, you’re a long way to understanding momentum trading. Back to the tape, sellers managed to accomplish this, but should buyers disrupt the pattern today by capturing 1522 it could put us back into a sideways chop. Chop isn’t ideal, but it allows individual longs to work.
This morning I’m looking for sellers to try and reassert themselves. I’ll be on the lookout for reactive buyers at 1515 (globex low) then 1511. Should they not show up, I expect sellers to hammer us back down to 1504. I’m looking for range compression. They key is where the compressed range builds value.
I was thrilled to recapture the necessary data yesterday evening to get a proper readout from the selloff. The first data point the jumps off the screen is the confluence of interesting data points surrounding the 1500 century mark. It is likely investors and traders keep this level in their mind regardless of their method of observing the market, but given the context of market profile we can verify significant activity occurring at this price.
It just so happens the value area low from the selloff (although a trend day in many ways lacks a value area) aligns with the VAL and VPOC from 02/21. The market worked its way back up to the level yesterday, but did not make it all the way for a proper test.
Yesterday featured reactive at the open when the market gapped higher overnight. The sellers were quick to react to the gap, and pressed their orders in, effectively filling the gap and even taking out the lows from 02/25. Then we say an aggressive reaction from the buyers which left behind a buying tail. Should that tail be violated it would suggest buyers have lost their conviction.
The profile yesterday also tells us the bulls struggled to maintain control after the initial reaction. The progress made on the bounce was ample, but they didn’t rage higher. There’s certainly overhead supply to consider now.
Today I’m looking for selling early on again, I’ll be monitoring for buyers to step back in and balance price out around 1486 and then attempt a test of the 1500 level. Should they push through, they will have to work over a value mountain spanning from 1502-1504 which could slow price. After that, things get slippery meaning we could either see a swift rejection lower or a pump right through.
Note this scenario is only a hypothesis. Should the day play out differently, that will provide me contextual clues to trade my stocks around.