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gassah

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Looks as though Heating Oil is coming up through the Primary Buy Zone (PBZ) for a potential spring change in trend (CIT) on the 18d. The ETF UHN is available.

 

Rob

5aa70eba09c0e_HeatingOil.thumb.png.3533300aaebc9cbf67d4071a41b6fd28.png

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I thought EURGBP was an example of an 18d pullback with a 5d Repo (reverse potential- continuation spring) with an entry by the arrow as it came above the PBZ (primary buy zone) and/or recent bar highs.

 

Rob

5aa70eba5e93c_EURGBPRepo.thumb.png.24e7bc74df2f6e1fb86bb34a1b1e63da.png

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EURUSD came out of the 18d PBZ following a little 5d spring. In Market Analyst the 5d structure looks more like a spring following 3 Drives to a Low (not shown). It came close to a diagonal terminal in MA but the AB/CD swings were off by 30% time-wise on the 290m chart (not shown).

 

Rob

EURUSD.thumb.PNG.a9c092cf1f5f75aad9ecfb99a72b2b2c.PNG

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Gassah,

 

Great work.. I just wanted your opinion on the S&P. I've attached a chart with what I'm looking at right now.

 

Technically the 18D line has turned up and we have a +2 LCC. Now, if I get an LCC-O I'm tempted to short this whilst keeping in mind that this structure could turn into a 5D Repo before it hits my AD Target of 702.

 

My concern is the fundamental news that's just come out with regards to the Fed's proposed treasury and toxic asset purchases. Whilst technicals are still pointing to the bear side the fundamentals are looking a bit better with bullish sentiment quite strong at the mo. These two divergent views may be enough for the market to follow the Repo script rather than a clean breakdown in price.

 

I'm thinking, go short with 1/4 - 1/2 the normal position size and see what happens or stay on the sidlines for a 5D Repo if following the short script.

 

How are you seeing the current play in the S&P?

 

Cheers

lote

5aa70ebb29219_SP19thMarch.thumb.jpg.2e27837476f7f6398e06e563c68aad5a.jpg

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How are you seeing the current play in the S&P?

lote

 

Hi lote,

 

I'm giving more weight to the possible spring change in trend pattern after the conviction bar through the PBZ on Thursday, and will look to buy stocks on a light volume pullback.

 

Rob

SP500.thumb.PNG.d5e25c66ee4facfae5c00d83bc20e416.PNG

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Rob,

Will look with great interest and see how this all develops.

lote

 

lote,

 

I try to remain flexible, entertaining both sides, and am not shutting out the bearish scenarios. I'm taking it day to day and would prefer more information before re-taking a position at the moment.

 

Rob

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Comparing SPY's downswings there's a 17% increase in average volume and a 14% decline in average bar ranges and, although not dramatic, this is a check mark in the accumulation column, IMO.

 

Rob

5aa70ebb788f5_SPYVolumes.thumb.png.8e1774baeb6981fbe15f23af5e916ffa.png

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Rob,

 

I think it's wise to keep both scripts in mind for now given the merky picture. The way I see it I'll consider a bullish script if three scenarios play out:

 

1. Valid WPC's above the 18D POC.

 

2. Decisive WRB through the 18D POC (This could happen next week when Geithner announces his plans on how he's going to deal with toxic assests on Bank balance sheets. Having said that, I don't generally like taking WRB's with news but Geithner's announcement is fundamentally very key and could tip the balance in favour of the bulls.)

 

3. Stable +5 LCC line pressure that looks well bid through the 18D POC.

 

We haven't experienced offsetting support at the weekly level yet for a trend change. The S&P reveresed near the 660 level, when looking at the weekly there's still some swing freedom left with support at the weekly of 600. It's just one more piece of the puzzle that's making me favour the short side for now but as you said, more info would be nice.

 

Cheers

Lote

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Something else to consider using one of Ray's Rules of Congestion is that a close above value suggests a move to the other side of value (80% probability). For those without Market Profile these levels can be approximated using 33 and 67%. It isn't a large move on the daily but on weekly or monthly charts they can be substantial.

 

Rob

Value.thumb.png.ba6fc09221b55917b5f63e1553da62cd.png

Value2.thumb.png.3fbd58c48ab015b63b053cd91fb31ac3.png

Edited by gassah
added 80% probability

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Ray introduced us to Constance Brown's technique of finding support and resistance using fibonacci ratios. http://www.amazon.com/Fibonacci-Analysis-Bloomberg-Market-Essentials/dp/1576602613/ref=sr_1_1?ie=UTF8&s=books&qid=1237668917&sr=1-1

 

I don't have the book with me but I'll try to explain how she makes the calculations. She always uses 38.2/50/61.8. To find resistance levels begin at a low and always project higher from the same low. This helps take into account expanding and contracting markets. Don't begin from a high for resistance.

 

If the low has a tail don't use the exact low because tails represent emotional buying and selling and don't count unless that level is tested. Otherwise use another nearby low, close or open. In this example all three levels were taken from the March 5th low. The first projection up should have the 50% level hit a wide range bar or a gap. It should end at a point where the move down really gets going. This is usually not the swing high point. It is usually a wide range bar high, like 2/10's bar. Look to the left of the calculated levels and if they are done correctly they should have found support in the past.

 

The second set goes up to another level and repeats the process, starting from the same low. The second one stops at the high of January 7th. We are looking for levels of confluence to mark resistance levels. The 50% line from the first extension and the 38.2 from the second overlap marking a level at 775. The third set is dropped from the Nov 5th high and provides confluence at three levels (red rectangle) or 797-803.

 

That's my understanding.

 

Rob

BrownSP500.thumb.png.469071d41880b01993beec2c0ff30c82.png

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The SP500 didn't accept beyond the maximum extension so it didn't negate the possibility of a spring. It then rallied with conviction above the PBZ (primary buy zone - bottom 1/8th range - 12.5% division) signaling a buy and suggesting a move to the PSZ (primary sell zone - top 1/8th range - 87.5%). It stopped (so far) at the bottom of value of the congestion in Jan-Feb.

 

Common early places for the downtrend to resume are the 50-67% divisions or the RC (running correction zone), which is in the same vicinity. We aren't there yet so I'm not going to worry about it.

 

The current setup is the buy signal and I will look to buy stocks on a pullback in the indexes. A common area for the pullback to complete is back in the PBZ, though a deeper test of the March lows would still be bullish, IMO.

 

And BTW, I'm not expressing Ray's opinions so don't assign my errors to him.

 

Rob

5aa70ebcb18ef_SP5003-24.thumb.png.a65323c49bfa859603bfe732f6d76806.png

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For the first time I dropped down a couple of time frames to the 15m 18d chart and attempted to make use of the Opening Gap Rule, anticipating an intraday upthrust and the start of a reaction on the daily for the SP500.

 

The first chart shows the rally entering the value area of the Jan-Feb range and hitting the POC. I thought this was a likely area of resistance.

 

The second chart shows how the swing highs moved farther and farther away from the overbought line of the linear regression channel suggesting a slowing of momentum.

 

The last chart shows the upthrust, the gap and penetration of the PSZ and the maximum extension where the stop is placed.

 

Rob

5aa70ebea3714_SP500POC.thumb.png.f47c01b0e02dd7e5c61ba3fa9f84f79d.png

5aa70ebeb0b14_SP500Momentum.thumb.png.60ef03e888a9c948b965ba3c34fb5f5f.png

5aa70ebebcb96_SP500OpenGap.thumb.png.b1c2a5eabff7fd94d7e56a4e6d540d6f.png

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I was stopped out on the SP500 short-term trade. If there was a mistake it was probably trading against the buy signal on the daily, IMO.

 

Here's one of the five forex trades in progress. Each has had the first 1/3 position taken off at the 50% level. I tried Ray's 'double the stop' exit for the first third position and noticed that it was often at the middle of the range so I save myself a calculation and use the 50% level/POC. The 50%/POC area seems high odds also because price is drawn there like a magnet. With the first third taken off around the double the stop area, and keeping the stop on the remaining two thirds at the original location, pretty much guarantees a breakeven trade.

 

A long position was taken in GBPUSD on 3/12. It bounced off the PBZ (daily chart) and I'm anticipating a change in trend. This is aggressive in the sense that the monthly line is down as is the weekly trend. OTOH, it was at monthly support and the 13w line was significantly oversold close to mean + 4 standard deviations. The spreadsheet shows the 13w impulse swings and the calculations. The 44.25 was excluded because it is an outlier.

 

The plan, having sold 1/3 at the 50% level, is to sell the middle third core position at the PSZ, and to hold the final position for a potential change in trend higher, and potentially adding back to the position if the trend does change.

Monthly.thumb.png.1e30f176f63e0138e4c3ff7d40789242.png

Weekly.thumb.png.cf3edd0d292b707507ca67ce24298ddb.png

Excel.thumb.png.750a5fdcc689e2d206d94600ad8e28f6.png

Daily.thumb.png.9e7c379592d58f01446d9b73e24cca1c.png

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USDCAD upthrusted on 3/9 allowing an entry within the next few days. A conviction bar below "A" or below the PSZ off the daily or 290m chart was possible. The volume on the upthrust was <92% of the bar at A and increases the odds of success. The weekly (13w) line was extended at mean+6 standard deviations indicating a likely change in line direction with an attempt at a trend change on the daily. My sample size is small so I didn't place a lot of weight on this.

 

The weekly and monthly charts are interesting because they might be forming a V Bottom. There's a WPC (whole point count) above B and the most common zones for it to fall to and reverse are the 50% level and PBZ of AB.

 

Ray has a tool for estimating when a range has enough cause built up to support a breakout. He calls it the Market Profile Advance Warning. There's a relationship between the number of bars in a swing leading up to a range, the number of hits at the POC (size of the range) and the maximum retracement. He calls the swing the IPM (initial price movement). I like to think of it as a flagpole and the base as the flag. If the cause is 0.4 or greater then odds favor it is time for a normal change in trend. USDCAD was at 0.89 at the upthrust further justifying an entry.

Daily.thumb.png.350d96d4448d60c5d3d0dd72d8ec11a6.png

Weekly.thumb.png.a3a7d6ed578020074135a775471bbf7e.png

Cause.thumb.png.b5d1c45959bcccf19e328a05cca1569d.png

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Good news for MarketDelta users. The latest version allows Market Profile creation for any highlighted times using TPOs or volume. The Jan-Feb congestion is proving difficult to get past.

MarketDelta.thumb.png.4b3614dde14969a4307ad7ba3e7fe102.png

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I was playing around with a buy scenario for the SP500....

 

The star is 4-5 trading days out at the 4-14/15 seasonal low in the 5d impulse/18d corrective time & price window where it should meet MIDAS near the PBZ and spring the March 30 low. Right.

5aa70ec226416_SP500Scenario.thumb.png.9762bcb6f93cfc256a8252cacff50725.png

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gassah,

 

Regarding Rays method, I don't understand how the POC hit count is made, since the POC can move as the range after the flagpole builds out. Is the calculation basically only performed at any one given point in time?

 

For instance, take a look at point B in chart #3. Assuming the POC was not drastically different from what is currently shown at that time, there were appromimately 1/2 the number of POC hits (18).

 

Therefore the cause = 18/23*.57 = .45 (still a buy)?

 

Thanks in advance for clarification.

 

snowbird

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