Pre-Market Discussion for Thursday June 7, 2007

[Dogpile 10]

Personally, I like to combine Market Profile with other concepts so I can't really talk just about Market Profile but here is my thought for today:

 

Market looked strongly like a trend day yesterday but in reality it was not. The market formed a 'b' profile, indicating likely participation of long-term, patient buyers. Elecotronic markets generally fall quickly. Forming a 'b' on a big down day is generally indicative of a market that may reverse (which may end up as temporary but useful as a trader).

 

Re Today,

 

Raschke says that there is a very strong tendency for the market to trade below the previous days low when the market closes with extremely bad breadth. Yesterday was the worst breadth since 3/13. The market appears to want to do that given globex action.

 

Thus the market will be opening below yesterdays POC. There is a stong tendency to want to touch previous days POC. Buying Pressure.

 

The 2-period ROC is a George Taylor type of gauge from the book 'Street Smarts'. It is buried and indicates there should be some buying pressure at some point today provided the market does not trade up first (which it isn't).

Buying Pressure.

 

I watch 'Summation Ticks' as an indicator of buy/sell programs that have become too one-sided. Sum-ticks are at an extreme today and due to flush up some today. Buying Pressure.

 

Re Momentum:

 

The market did make a momentum low yesterday using 60 & 120-minute oscillators. This calls for lower prices today. It looks like we will get that this morning. I will be watching for buy divergences on the next push down.

 

Net Net,

 

Expectation is for a morning reversal back up toward the 15-min 20-ema but will monitor the action closely to not get run over if the market does do the unlikely trend day (true trending days are quite rare). George Taylor would call today a 'Buy Day lows made first'.

 

late caveat, the bond market is getting absolutely slammed today. The morning might have a strong move down -- usual reversal time is more in the 10am to 11:30am timeframe (EST).

[bakrob99 11]

How do you calculate "Summation Ticks" ? Oh ... and Nice post by the way.

[Dogpile 10]

<<How do you calculate "Summation Ticks" ?>>

 

the exact formula is actually confidential but you can follow it here on the homepage...

 

Linda Bradford Raschke - LBR Group

 

todays reading is extremely low indicating sell-programs have dominated for an extended period of time. This would add fuel to the fire if there were a reversal. In a big massive downtrend the sum-ticks will get run over. But as a short-term trader, I am less concerned with big massive trend moves since I care only about the swings and not about the 'close to close' move.

[TinGull 10]

Also something to consider...the past 2 days price hasn't even been able to retrace more than 50% of it's daily range in the latter half of the session. Both retraced just to 50% and then fell. The YM (market I trade) is trading below a very pivotal area right now. 13450 had formed a V pivot on a 65minute chart, and its like to blow right through that since it didn't form much balance last time price visited here. After that, we've got the 400 area to give us some support. I agree...with the b shaped profile the selling had stopped, and could look for some consolidation before heading lower. I don't think there's much evidence just yet of larger time frame participants getting heavy into the market.

 

I could be totally wrong, too...

[Dogpile 10]

10:15am update.... market gapped down but did 'open-drive' up. watching for buy divergences on next push down. I was expecting the global interest rate surge to cause opening hour weakness and instead market went up off the opening price -- probably a squeeze. but screws up timing of a clean morning reversal up to test 15-min EMA will have to monitor momentum of this push down and then look for 15-min 20ema test.

[Dogpile 10]

bonds in total crash mode today.... no long trades