Post-Market Discussion For Friday June 8, 2007

[Dogpile 10]

The S&P opened lower and traded up to its 15-min 20-ema. then formed balance at 1509.25 with low 5-min ADX (a coil). It broke out of this coil to the upside and trended up for the remainder of the day.

 

NQ formed its POC at 1919.00 and closed on a price spike to 34.50.

 

Will 'value' migrate up to price or was it just a 'price spike' which will form value significantly lower than 34.50 on Monday?

 

There is 'Pinball Sell' pressure as per Rashke concept given todays high close. See the 'Street Smarts' book for the concept.

 

There is a tendency to return to previous sessions POC which suggests a good flush down on Monday. As always, there is a very strong tendency to touch the 15-min, 20-ema.

 

That said, the trending nature of the afternoon with strong close suggests that the near-term 'up auction' may not be over quite yet.

 

For Monday, I will look for opportunities to short if suspect that the 'high is made first' -- for a play back towards the 15-min EMA and/or to go test the previous day POC. As always, I will remain flexible in the case of a strong trending environment to the upside. Was Friday morning the climax in the bearish bond market move? Sure looks like an 'excess low' could have formed as responsive buyers rejected the lower price (higher yield). Of course, its is quite possible some other shoe could drop to cause the next leg of downside in the equity markets? I don't really care, so long as we get some nice swings along the way.

 

cheers

 

comments appreciated

[walterw 10]

My coment Dog is that I would strongly recomend you using visual aid (charts)... we are all analist here and our language is in charts... very dificult to understand what you are talking about... seems interesting but dificult to follow... thats my 2 cents... take it or leave it.. cheers Walter.

[Dogpile 10]

ok walter, thx...

 

I was just describing the high-level 'structure' of the day.

 

Traded below previous day low and then formed low of day in period 'A' -- opening 30-mins.

 

Traded up and touched 15-min 20-EMA in period 'B' -- 2nd 30-min bar.

 

Very common to form a coil around lunch time (periods F-G) following a trend day. Note that you can draw converging trendlines and can see low 5-min ADX(14) -- see link to chart. Converging trendlines and low 5-min ADX describe a market that is coiling/balancing for an afternoon breakout attempt.

 

Market breaks the coil in period H and trends up into the close.

 

POC for Friday was 1919.00 --- odds are that NQ will test this level at some point on Monday. Has done this on 78% of days (tested previous day POC) this year.

 

here is 15-min NQ.D chart.

 

NQJune82007.jpg - Image - Photobucket - Video and Image Hosting

[walterw 10]

Ok Dog now I start to see what you are talking about... you can attach here your charts... this is an explanation on how to do it http://www.traderslaboratory.com/forums/f30/how-post-chart-properly-805.html cheers Walter.

[alleyb 10]

 

I know you are talking NQ dogpile but just wanted to add my 2 cents on S&P to your comments with which I concur

[Dogpile 10]

hi alleyb,

 

you say "the normal day turned into a Normal Variation Day (NVD) with 1521.30 and possibly 1530.6 as tartgets"....

 

just curious what these numbers are? are those Fib retracements or something else?

[alleyb 10]

no they are ES upside tgts based off the profile. the one thing that you do not find with any of the MP practioners is how to arrive at an exit. It is something that I perfected back in the 1980s that has been honed to take into account the modern day era of electronic trade where the day beginning and ending are not as clearly defined as just being the regular trading hours and so descriptions of the day type especially normal variation day which Steidlmayer described as being a range extention outside the IB by 15% are no longer valid descriptions and must be replaced by doubling and trebling of the IB range

[waveslider 10]

"doubling and trebling of the IB range"

 

that caught my eye.

 

Alleyb, could you please slow down and describe what you are talking about in regards to your quantitative targets.

 

Also, what do you use for current "hard right edge" analysis in the market to establish direction? (ie. aside from your targets, what do you use see what the market is doing here and now) Targets are one thing, in my experience reality can be completely different.

 

Reiterating walter's requests - please use visual aids, and "keep it simple"

 

thanks,

 

slider.

[alleyb 10]

go back to the chart I posted above. If when you click on it to make it big it is not clear/in focus then look for the 4 way arrow on the bottom right hand side to improve imagery.

Take the IB which stands for Initial Balance or in simplistic terms the first 60 minutes as represented in that chart by the B and C range. the low of which was 1502.7 the high of which was 1512 . Take one from the other to establish the difference = 9.3 which when added to the 1512 = 1521.3 added again = 1530.6. Now the question arises what to do if the upper target not achieved and that is simple it is a case of monitor price action at 1521.3 and from the slightly longer term profile then clearly 1515 is a hidden pivot. It could be argued that from the medium term profile that 1517.75 might be a better level but either way it matters little in that a reject of Fridays rally in some way would be evidenced via downward rotation back through the range and subsequent remaining below 1515 would be negative. If the downside does not manifest itself then obviously the probability of hitting the upper target is enhanced

[alleyb 10]

....hard right edge...

I only use Market Profile, have done since 1986 when I first met Pete Steidlmayer. Why would one use anything else when the data wharehouse as I refer to the market place gives you all the information in terms of who, how, when, for how long based off the statistical evidence of volume, price, time. This is the basis of any market analysis whereby if you plot the bell curve you can then extract proability scenarios, which if you like become statements "If this then that".

........Reality...........

It's always about reality and perception.

Pete Steidlmayer wrote and I hope he does not mind that I paraphrase his words. Check the pit call. If the open then is materially different go with the pit for clearly there was a change of expectation by longer time horizon trader.

The market expects some form of consensus on a report, but does the opposite of expectations that is when the perception changes to reality

[TinGull 10]

Dogpile and alleyb, this is really great stuff. I love this discussion about using IBx2 or 3 for price targets. I had never come across this in my studies before, alleyb. Is there a place where I might read more about this? By plotting those on my MP charts, they do seem to be nice places for targets.

 

Thanks again

 

Chris

[Dogpile 10]

ok alleyb, I see your point.

 

you effectively say that traditional MP practicioners underestimate the upside potential after a wide initial balance due to a bit of a change due to more electronic markets, especially for Normal Variation Days. (fyi, Normal Variation Days are days that essentially see 1 push, followed by some acceptance of that price --- and then higher timeframe players extend the range later in the day).

 

Traditionally, 'normal variation days' (NVD) do not have as wide an 'initial balance' as normal days. A normal day is swift early entry by other timeframe players, creating a wide initial balance, followed by little directional movement. Thus, 'normal days' and 'normal variation days' look similar until the point of the range extension later in the day.

 

so Alleyb, you are saying that if you do get a NVD, it can often extend 2x to 3x the width of the initial balance. so either:

(2-3x opening 60-min Range) + (low of day)

 

Thus the real issue is distinguishing a NVD from a normal day quickly as they will both look the same before the afternoon range extension.