An Institutional "Look" at the S&P Futures

[joshdance 10]

Hi steve,

 

I found your posts here after our discussion on the other thread, and I think this is a better place to discuss the ideas anyway :-) Had I known about this thread I would have read it first before asking those questions.. :-)

 

It looks like in the last few charts that you have 2m, 5m, 10m charts... are these how you time some of your entries? I'm looking at using the 240, 60, and 30 to identify the levels, and then using the 15 for intraday monitoring, with the 3 or 5 minute for timing the entry. Does this sound like a workable scenario in your opinion?

 

One more question: do you trade anything other than the ES? I'd like to apply these concepts across all markets and I'm sure that they will work as supply and demand are universal, BUT perhaps it works better for the indices and markets like the ES and DAX than for commodities. What is your opinion?

[steve46 12]

Josh

 

I have already replied to your questions...I start with longer term charts and work toward the short side...As I have said now several times, I have been doing this for years, so for MY purposes the time frame is not critical...its a matter of scanning from longer to short time frames until you find the one or two that allow YOU to visualize price action accurately. I hope you will understand this next part because it may be crucial to YOUR progress.

 

The items you are asking about are only part of the process I use...In addition I monitor a couple of other data point including time based pivots and value...finally I am able to read the tape....this means that when price tests one or more of these data points, I can see fairly quickly whether the bid or offer are going to be held, or whether price will take them out....

 

The bottom line is, (my opinion) that to have consistent success, a trader needs more than just S/D analysis....skilled pros have all the tools in place, AND they are able to use them skillfully..

 

The sysematic approach I outlined works in all markets....Currently, I maintain a presence in the US bond market, currencies, and the S&P 500 futures and to do that, I need to spend a significant amount of time doing MY homework. I am glad to answer the odd question or two as time permits....but frankly in this venue, I cannot do much more than I already have....thats why I have posted several threads outlining what I do, so that you can study whenever you have time....I hope that helps.

Edited March 28, 2011 by steve46

[joshdance 10]

It certainly does help, thanks again steve, look forward to any charts you are able to post while doing your homework, and perhaps I'll post my homework as well and you and others can critique it.

[deerhunting 10]

Hi Steve , awesome post. I have a question if you don't mind.? The es opened at 1311.50 ran up and hit supply correct? Then ran down to demand (this is were I get a little lost , because it never found demand). It did not find demand and closed below the 30 day moving average on the es. Why didn't the big boys come in defend the opening price of 1311.50? I know you may not know why , but I would like to hear your thoughts on the subject. I have read this post a number of times and keep picking up information every time. Thanks for sharing your knowledge of the big boys.

[joshdance 10]

Hi Steve , awesome post. I have a question if you don't mind.? The es opened at 1311.50 ran up and hit supply correct? Then ran down to demand (this is were I get a little lost , because it never found demand). It did not find demand and closed below the 30 day moving average on the es. Why didn't the big boys come in defend the opening price of 1311.50? I know you may not know why , but I would like to hear your thoughts on the subject. I have read this post a number of times and keep picking up information every time. Thanks for sharing your knowledge of the big boys.

 

I'd like to have a go at this, and steve can correct me where I'm wrong.

 

I shorted this at 1314 near the open, but only had 1 contract on so felt obligated to take the profit at 1311, and did not re-enter on the retests of 1312. Wish I had, as the bottom fell out! In fact I went long at 1307 looking for a push back up but got railroaded in the process.

 

I think you are correct that it nudged inside the bottom of the supply level, namely the level from 1313 to 1320 that formed in the globex session late on 3/8 into early 3/9. As to demand, I think it simply has not found it yet. Not enough activity. I expect a retest of 1310, and then a further drop to 1293, where I think a good long opportunity will present itself... either there or 1283. How far we go down I don't know, and maybe we will even come up to test what look to be strong supply levels at 1325 or 1334. I still feel the overall picture is bullish, either way price goes in the next few days.

 

As to defending the open at 1311.50, what is there to defend? Who says the "big boys" are short right now? Perhaps after a decent mark down of price, when it goes on sale, they will buy back and mark it back up.

 

That's just my outlook on it, steve please help me out! :-)

[steve46 12]

Here is the short version

 

Most professionals have a mental frame reference that carries them through on day's like today...we know that at the top of a distribution, you look to get short (because the odds favor price getting rejected the first attempt to take out a swing high)....at least from my point of view this is very basic stuff.

 

Second you have price taking out the Market Profile Value Area High but then volume drops off...Of course you have to be able to read the tape to know that, but I can't help you there (not in this venue sorry)....so for me this part is a walk in the park. Price attempts to take out 1315 level six (6) times from 7:14 to 7:46am PST. On the seventh attempt, price fails and is rejected down...Generally speaking I prefer to get short on the third failure to take out the high...

 

I don't know what else to say....except maybe that most experienced participants are looking for 10pts minimum once they get short in this situation...thats pretty much standard. In contrast, the retail crowd is generally trading for ticks or a couple points at best....because they can't tolerate the psychological tension of an open position...Clearly it takes time to get used to that feeling...

 

Don't know what else I can say...

 

Best of luck to all

Edited March 29, 2011 by steve46

[mead 10]

I'd like to have a go at this, and steve can correct me where I'm wrong.

 

I shorted this at 1314 near the open, but only had 1 contract on so felt obligated to take the profit at 1311, and did not re-enter on the retests of 1312. Wish I had, as the bottom fell out! In fact I went long at 1307 looking for a push back up but got railroaded in the process.

 

I think you are correct that it nudged inside the bottom of the supply level, namely the level from 1313 to 1320 that formed in the globex session late on 3/8 into early 3/9. As to demand, I think it simply has not found it yet. Not enough activity. I expect a retest of 1310, and then a further drop to 1293, where I think a good long opportunity will present itself... either there or 1283. How far we go down I don't know, and maybe we will even come up to test what look to be strong supply levels at 1325 or 1334. I still feel the overall picture is bullish, either way price goes in the next few days.

 

As to defending the open at 1311.50, what is there to defend? Who says the "big boys" are short right now? Perhaps after a decent mark down of price, when it goes on sale, they will buy back and mark it back up.

 

That's just my outlook on it, steve please help me out! :-)

 

I'd like to have a go at this also. Based on what I've picked up from this thread and others Steve has contributed to, here is what I'd say: first off, it is important to remember Steve has never suggested a person place a trade based solely on supply/demand nodes. To follow his example, we need to be looking for confluence of: 1) supply/demand nodes, 2) volume profile levels, 3) time based pivots, and 4) tape reading. There may be other things he incorporates, but these have been mentioned several times.

 

Now, to look at this morning, last week's high was 1314.50, so we came up and tested that high (a time based pivot). Yesterday's value area high was 1313.50, so we tested it and took it out by a couple points (something institutions like to do) (a volume profile level). And on my 60 min. chart, there was a node of supply around 1313.50 to 1312.50 (from 3/25). So we have all that confluence going for us. I cannot speak to tape reading, that is something I just have not yet been able to wrap my brain around.

 

As to where one might find support, remember - it is confluence we are looking for, not just a support node. As I type, the Globex is forming a base right now. As I look at my different timeframe charts, I see on my 30 min. chart a possible area of prior support from 3/24 in the 1302.50 - 1301 area. I am not aware of a time-based pivot corresponding to this level, but I may be missing it. Right now we have 1301.75 as the current weekly low, so we could use that if it is tested.

 

And as to why today's opening price wasn't defended? Ahhhh, if only it were that easy!

[joshdance 10]

Now, to look at this morning, last week's high was 1314.50, so we came up and tested that high (a time based pivot). Yesterday's value area high was 1313.50, so we tested it and took it out by a couple points (something institutions like to do) (a volume profile level). And on my 60 min. chart, there was a node of supply around 1313.50 to 1312.50 (from 3/25). So we have all that confluence going for us. I cannot speak to tape reading, that is something I just have not yet been able to wrap my brain around.

 

Excellent analysis IMO mead, especially regarding last week's high, as I haven't begun to use these values yet (one thing at a time for me). Also I don't use volume profile as I find it more a distraction, but also good job looking at that. I would not say the supply areas were strong from the 25th or the Globex on the 28th, but one reason I took the short-- low risk, high probability. Top of the range, weak day on Friday, I gave it enough ticks (6) to push a little above, and had I had more than 1 contract I was willing to hold the remainder to 1306 at least.

 

As to where one might find support, remember - it is confluence we are looking for, not just a support node. As I type, the Globex is forming a base right now. As I look at my different timeframe charts, I see on my 30 min. chart a possible area of prior support from 3/24 in the 1302.50 - 1301 area. I am not aware of a time-based pivot corresponding to this level, but I may be missing it. Right now we have 1301.75 as the current weekly low, so we could use that if it is tested.

 

I think it's a stretch the identify the area formed on the 24th at 1300 as a good area that will hold... it's not clear, and if you didn't know that price has held at 1302 right now then I doubt you would use that as a good target area, though the magic of round numbers might give it more strength than it's due. Whether we test 1310 first or not, I will be betting (i.e. trading) that we will see 1293 before we go much higher, and even more likely 1283.

 

Thanks again for posting this analysis--bouncing ideas off each other like this is fantastic!

[MightyMouse 12]

Excellent analysis IMO mead, especially regarding last week's high, as I haven't begun to use these values yet (one thing at a time for me). Also I don't use volume profile as I find it more a distraction, but also good job looking at that. I would not say the supply areas were strong from the 25th or the Globex on the 28th, but one reason I took the short-- low risk, high probability. Top of the range, weak day on Friday, I gave it enough ticks (6) to push a little above, and had I had more than 1 contract I was willing to hold the remainder to 1306 at least.

 

I think it's a stretch the identify the area formed on the 24th at 1300 as a good area that will hold... it's not clear, and if you didn't know that price has held at 1302 right now then I doubt you would use that as a good target area, though the magic of round numbers might give it more strength than it's due. Whether we test 1310 first or not, I will be betting (i.e. trading) that we will see 1293 before we go much higher, and even more likely 1283.

 

Thanks again for posting this analysis--bouncing ideas off each other like this is fantastic!

 

Josh,

 

Are you trying to short down to 1293? or 1283?

 

MM

[joshdance 10]

Josh,

 

Are you trying to short down to 1293? or 1283?

 

MM

 

Hi MM,

 

Right now my plan is to look at the situation in the morning-- I would not go short at this moment as ES is at 1304.50 and I think it will go higher before it goes lower. If it returns to 1310 I will be interested in a short, but probably not unless it gets there, though I may also consider 1307.50 as it stalled on the way down, and was previous support, though this is low probability to me. 1310 is not 100% ideal to me either though, as there may still be sellers to be probed for at 1315. If the move up to 1310 were strong, I would step aside and wait for a better price. At that point if the entry worked, I would take the first unit off at 1302, trailing my stop appropriately, and hold the second to 1293. I would look for a different setup at that point if 1283 seemed to be in sight.

 

Mind you, this is just my plan, and I would just as soon go long at 1293 if we go there first, in fact that would be my preference as we are still in a bull mode, IMO. It makes sense in my head anyway, though others may find what I'm saying useless or confusing.

[joshdance 10]

I think it's a stretch the identify the area formed on the 24th at 1300 as a good area that will hold... it's not clear, and if you didn't know that price has held at 1302 right now then I doubt you would use that as a good target area, though the magic of round numbers might give it more strength than it's due.

 

I looked at the Russell just now and saw that on 3/25 at 10AM, there is nice evidence of demand right around where price stopped its move down today (817). While TF and ES are not identical of course, they do correlate and this may have something to do with where the ES stopped, though I may be talking out of my arse here. But it seems like at least a possibility.

[MightyMouse 12]

Hi MM,

 

Right now my plan is to look at the situation in the morning-- I would not go short at this moment as ES is at 1304.50 and I think it will go higher before it goes lower. If it returns to 1310 I will be interested in a short, but probably not unless it gets there, though I may also consider 1307.50 as it stalled on the way down, and was previous support, though this is low probability to me. 1310 is not 100% ideal to me either though, as there may still be sellers to be probed for at 1315. If the move up to 1310 were strong, I would step aside and wait for a better price. At that point if the entry worked, I would take the first unit off at 1302, trailing my stop appropriately, and hold the second to 1293. I would look for a different setup at that point if 1283 seemed to be in sight.

 

Mind you, this is just my plan, and I would just as soon go long at 1293 if we go there first, in fact that would be my preference as we are still in a bull mode, IMO. It makes sense in my head anyway, though others may find what I'm saying useless or confusing.

 

I was thinking somewhat of the opposite. If it stays above 1301.75, I would buy it with a buy stop at 1310. If it didn't stay above 1301.75, but stayed above 1299.5 I would still buy it but I would buy it a little lower than 1310. In either case I would begin adding to it at about 1330 and trying to ride it to a new high.

 

I see the move up from the 1280 area as a relatively solid move and I believe there is still more demand to continue the move. The afternoon sell off occurred on weak volume and was aggressive. I suspect that weak longs exited, aggressive shorts entered. The inside buyers who absorbed the selling late in the day and held overnight I would not consider weak. I won't jump in just yet since they can be wrong, but I will up above. I would be worried this morning if I were still short from yesterday and if there is no follow through on the downside.

 

I would want to short this if we broke below the 1299 area and it occurs on decent volume. By volume I mean market volume and not ES volume. In that case I would try to ride it back down below the low.

 

I am in an oil trade and will not do any of the above if I have not exited the oil trade first. I only want to have one trade at a time.

 

Anyhow it is always interesting to me to see the different views that are occurring in a market.

 

Good luck.

 

MM

[joshdance 10]

Thanks MM, sounds like a very reasonable and logical plan!

 

As an aside, my lower demand area on bonds was touched overnight, the top at 120'05, where I was willing to buy (but not confident to place a limit order, would have bought on the near retest around 7am but I was not quite up yet). Also, my upper area on the euro (range from 1.4118 to 1.4139) was penetrated around the london open and has dropped nicely since then to the first logical target (1.4045 and dropping). I'm just not confident to place an overnight order, not yet anyway.

 

Look like ES also touched that area at 1308 I mentioned and had about a 4 or 5 point move down, which would have been a nice scalp, and I may have been willing to give that a go if I'm in front of the screen but no way otherwise.

 

I'm also watching GBPUSD and the russell, but nothing happened overnight on my charts regarding setups there.

[joshdance 10]

My short didn't work out at 1311, I only gave it two points, which is small but given the quality of the level (IMO not as good as 1325-1330), it was all I was willing to give it. Good call on 1301 or thereabouts holding, I hope you got your buy! Perhaps you did even better than 1310 and bought the retrace at 1306!

 

I am still surprised that 1300 held, and sooner or later, I believe we will see 1292 and 1280-82 retested, and I think both will likely provide good buying opportunities. I just don't think 1300 has anything going for it other than the fact that it's a nice round number. If I were going to buy, the demand I see evidence of originating at 1292 (in the past granted) would compel me to wait for a better price. But that's the thing, it doesn't really matter what I would do, the train left the station and I got left behind!

[MightyMouse 12]

My short didn't work out at 1311, I only gave it two points, which is small but given the quality of the level (IMO not as good as 1325-1330), it was all I was willing to give it. Good call on 1301 or thereabouts holding, I hope you got your buy! Perhaps you did even better than 1310 and bought the retrace at 1306!

 

I am still surprised that 1300 held, and sooner or later, I believe we will see 1292 and 1280-82 retested, and I think both will likely provide good buying opportunities. I just don't think 1300 has anything going for it other than the fact that it's a nice round number. If I were going to buy, the demand I see evidence of originating at 1292 (in the past granted) would compel me to wait for a better price. But that's the thing, it doesn't really matter what I would do, the train left the station and I got left behind!

 

Josh,

 

I did not buy because I was still in an oil trade and once again I am in an oil trade. If i bought it would have been at 1308.5 and I would still be in it.

 

I wasn't making a call on it at all. It simply went where it went and I happened to have mentioned it. I was only stating some of the conditions I wanted to exist for me to want to get long and the conditions that I wanted to exist to get short.

 

MM

[steve46 12]

I'd like to have a go at this also. Based on what I've picked up from this thread and others Steve has contributed to, here is what I'd say: first off, it is important to remember Steve has never suggested a person place a trade based solely on supply/demand nodes. To follow his example, we need to be looking for confluence of: 1) supply/demand nodes, 2) volume profile levels, 3) time based pivots, and 4) tape reading. There may be other things he incorporates, but these have been mentioned several times.

 

Now, to look at this morning, last week's high was 1314.50, so we came up and tested that high (a time based pivot). Yesterday's value area high was 1313.50, so we tested it and took it out by a couple points (something institutions like to do) (a volume profile level). And on my 60 min. chart, there was a node of supply around 1313.50 to 1312.50 (from 3/25). So we have all that confluence going for us. I cannot speak to tape reading, that is something I just have not yet been able to wrap my brain around.

 

As to where one might find support, remember - it is confluence we are looking for, not just a support node. As I type, the Globex is forming a base right now. As I look at my different timeframe charts, I see on my 30 min. chart a possible area of prior support from 3/24 in the 1302.50 - 1301 area. I am not aware of a time-based pivot corresponding to this level, but I may be missing it. Right now we have 1301.75 as the current weekly low, so we could use that if it is tested.

 

And as to why today's opening price wasn't defended? Ahhhh, if only it were that easy!

 

Hi Mead

 

You nailed it...and just to keep things in perspective....confluence is desirable because it increases the odds of success (more traders monitoring the setup = more traders likely to take the trade). But we don't need more than two data points.....if you happen to see more....if the planets align so to speak, well thats a happy coincidence....and of course the odds increase with each additional item you can find. Just remember that you have a limited amount of time in which to evaluate the data and act...

 

good luck

[joshdance 10]

Hi Mead

 

You nailed it...and just to keep things in perspective....confluence is desirable because it increases the odds of success (more traders monitoring the setup = more traders likely to take the trade). But we don't need more than two data points.....if you happen to see more....if the planets align so to speak, well thats a happy coincidence....and of course the odds increase with each additional item you can find. Just remember that you have a limited amount of time in which to evaluate the data and act...

 

good luck

 

Do you ever set limit orders in advance and let the trade happen (say, a sell limit at the bottom of a supply area)? Or do you like to be present and monitor the price action in person?

 

Do you tend to look to trade from the middle of the area if price goes that far, or are you comfortable pulling the trigger at the bottom edge of a supply area and the top edge of a demand area, when price touches it?

[steve46 12]

Do you ever set limit orders in advance and let the trade happen (say, a sell limit at the bottom of a supply area)? Or do you like to be present and monitor the price action in person?

 

Do you tend to look to trade from the middle of the area if price goes that far, or are you comfortable pulling the trigger at the bottom edge of a supply area and the top edge of a demand area, when price touches it?

 

Limit orders are a good way to lose money....I don't use them because I don't like to miss entries.

 

I don't trade the "middle" of any area...period..I get in where I am supposed to, I respect my stop placement and every so often I take a loss.....since I started doing it that way, my success rate is always above 80%. Now the truth is that I can do this confidently because I have a history of identifying the S/D areas accurately....I assume you are just starting to do this....so it may take you a while to find that kind of confidence in your own entry placement.

[joshdance 10]

Limit orders are a good way to lose money....I don't use them because I don't like to miss entries.

 

I don't trade the "middle" of any area...period..I get in where I am supposed to, I respect my stop placement and every so often I take a loss.....since I started doing it that way, my success rate is always above 80%. Now the truth is that I can do this confidently because I have a history of identifying the S/D areas accurately....If you are just starting out, it will probably take a while until you have a record of doing the same.....then if you want to modify your entry placement you can do it, because you earned the right to....you see.?

 

Yes I understand what you mean-- say, for example:

 

1) Price comes down to the top of a level you are looking to buy, and touches it to the tick, and bounces off. Would you typically wait for price to move a bit lower and then re-evaluate to see if you want to enter long, or will you buy at the market off of a quick rejection of the level? The answer may be "it depends" and of course I understand that each scenario is different.

 

2) If prices move to the middle of a level you want to buy at, and then shows characteristics of a reversal, you would buy "in the middle" of that area, correct? I'm thinking the level will be small, and you will place your stop on the other side of the level, hence it will be a good opportunity to buy. Am I right?

[joshdance 10]

I would want to short this if we broke below the 1299 area and it occurs on decent volume. By volume I mean market volume and not ES volume. In that case I would try to ride it back down below the low.

 

MM, I meant to ask -- I assume the cash S&P volume?

 

Also, I noticed that the whole up move from 3/17 to 3/29 is on decreasing volume, while the move down from 3/10 to 3/16 is on increasing volume. Does this indicate a possible downside correction soon to you? In fact, from 1/31 to 2/18 the up move was on pretty quiet volume as well.

[MightyMouse 12]

MM, I meant to ask -- I assume the cash S&P volume?

 

Also, I noticed that the whole up move from 3/17 to 3/29 is on decreasing volume, while the move down from 3/10 to 3/16 is on increasing volume. Does this indicate a possible downside correction soon to you? In fact, from 1/31 to 2/18 the up move was on pretty quiet volume as well.

 

The move up is on decreased volume. If you look closely, you'll see weak volume on each attempt to sell off from the 16th. So the volume on the down moves is lower than the volume on the up moves. if you need to, add up the volume on the moves and divide by the days if it is not clear.

 

So, with price rising and volume stronger on the up moves, I want to be long most if not all the time. This can continue for days, weeks or months for all I know and wouldn't question its ascent. When volume does increase on the down move, and then decreases on the up move, It will set up another correction like we just had from the high. It will not likely "VEE" back down. So you do not have to try to call the top. You will have plenty of time to take a short.

 

The move down from the high pretty much erased all the gains for the year and now we are climbing back up again. We could be forming a range, or we may simply break out above the high and continue higher. Volume will give you a clue, but whether we break out and continue will depend on how much more demand there will be as we go higher. It looks like there is still a lot of demand.

 

Anyhow, that's the best I can do in 200 words or less.

 

MM

[joshdance 10]

The move up is on decreased volume. If you look closely, you'll see weak volume on each attempt to sell off from the 16th. So the volume on the down moves is lower than the volume on the up moves. if you need to, add up the volume on the moves and divide by the days if it is not clear.

 

So, with price rising and volume stronger on the up moves, I want to be long most if not all the time. This can continue for days, weeks or months for all I know and wouldn't question its ascent. When volume does increase on the down move, and then decreases on the up move, It will set up another correction like we just had from the high. It will not likely "VEE" back down. So you do not have to try to call the top. You will have plenty of time to take a short.

 

The move down from the high pretty much erased all the gains for the year and now we are climbing back up again. We could be forming a range, or we may simply break out above the high and continue higher. Volume will give you a clue, but whether we break out and continue will depend on how much more demand there will be as we go higher. It looks like there is still a lot of demand.

 

Anyhow, that's the best I can do in 200 words or less.

 

MM

 

Thanks MM-- you seem to be describing the buy vs. sell volume in the context of the period of 3/16 to 3/29, and in the context of that move up we only had two down days, and you're correct, both of those days were low volume, and I went to the 240 minute, and the biggest down move we had was the move 2 days ago on the 28th, and that was only 472K contracts on the ES traded, the 2nd lowest volume afternoon we've had in that period. So, I agree, in the context of the up move, that the buying volume clearly wins out.

 

However, another way of looking at it is in the context of the entire period of 2/21 until 3/29, which is a down move, consolidation, another down move, and now back up. In that context, the volume is much higher on the move down as compared to the move up. However, as I look at the 4 hour chart, there are really only 2 or 3 truly nice down moves on high volume, and there are even a few nice up moves on high volume.

 

So what you're saying, if I understand correctly, is that in the context of the current up move, you don't particular consider the heavy down volume on the prior down move, and that while the sellers seem to be absent currently, this alone, coupled with even just a little buying volume, are enough to move price up. Am I correct?

[MightyMouse 12]

Thanks MM-- you seem to be describing the buy vs. sell volume in the context of the period of 3/16 to 3/29, and in the context of that move up we only had two down days, and you're correct, both of those days were low volume, and I went to the 240 minute, and the biggest down move we had was the move 2 days ago on the 28th, and that was only 472K contracts on the ES traded, the 2nd lowest volume afternoon we've had in that period. So, I agree, in the context of the up move, that the buying volume clearly wins out.

 

However, another way of looking at it is in the context of the entire period of 2/21 until 3/29, which is a down move, consolidation, another down move, and now back up. In that context, the volume is much higher on the move down as compared to the move up. However, as I look at the 4 hour chart, there are really only 2 or 3 truly nice down moves on high volume, and there are even a few nice up moves on high volume.

 

So what you're saying, if I understand correctly, is that in the context of the current up move, you don't particular consider the heavy down volume on the prior down move, and that while the sellers seem to be absent currently, this alone, coupled with even just a little buying volume, are enough to move price up. Am I correct?

 

Seems like you understood, but there is a lot too it too. The market usually goes down a lot quicker than it goes up so the volume on the way down in a down move is usually higher than on an up move. And I only consider what is happening now relative to what happened most recently. So, looking at the sell off from the high and comparing that volume to this volume on the way up doesn't apply on a sub level. If you widen your time frame and look at the move up then the move down and then this move up, this could end up being an unsustainable move up if overall the volume on this up move is too low. But, I never argue with market direction. If the direction remains up, I want to be long. When the direction changes, before we get to the high and we then sell off with higher volume and a wider range, then I want to get positioned short. But that will usually happen after it retraces up on low volume so there is an opportunity to get short without having to call the top. The low volume up move could be followed by a low volume down move, in which case you would want to remain long or get long or wish you had stayed long.

 

The top will happen on its own. If you are in the market, you may have to take a loss when it transitions if you got in recently and not at the beginning of the move. If you got in early, your loss some of your profits but end up with a really nice trade. You do not have to get in at the low tick or get out at the high tick to make money. I am always willing to give up some on both ends to give me confidence that I have the directions right.

 

Also, you can't just look for high or low volume either; the volume is just a part of it.

As an example, in an up move, if there is a high volume sell off that occurs in a very small range, then that may very well be a bullish sign. It could be the result of a news event where weaker traders hand over their positions to stronger traders who get the opportunity to buy a lot of shares at lower prices without having to bid them up against themselves.

 

The most information we have available to us is price, volume, and time without cheating. I try to use all 3 and avoid markets that I do not have all 3 such as the currencies. My feeling is that somehow someone else has all three in the currencies and I do not so I am at a disadvantage. Like flying a plane with one eye.

 

MM

[Ants88 10]

Great posts 46;

 

So the weekly open is every Monday 9:30 est.

 

Are the yearly, quarterly and monthly opens the first Monday of the year, quarter and month - or the first trading day (at 9:30 est) of year, quarter and month?

[steve46 12]

Great posts 46;

 

So the weekly open is every Monday 9:30 est.

 

Are the yearly, quarterly and monthly opens the first Monday of the year, quarter and month - or the first trading day (at 9:30 est) of year, quarter and month?

 

Ok so yes....the weekly open is Monday the first trading day of each week, in whatever time zone you happen to be in...

 

Same with the monthly, and quarterly open...and as we get closer to the end of each time period, traders seem to be motivated to come in and "defend" those prices..

 

Thats the basic system...in addition, when markets retrace, traders from institutions are often motivated to come in and try to get things "back on track" and to do that they try to move price back up past the high of the time period. To do this, we try to move past the open, and then past the high so that we can "catch up" and re-establish the previous trend.

 

The attached chart shows that action today, as traders tried several times to defend the previous day's high (and by the way, the previous week's high is just a few ticks above at 1341.25)....

 

I hope that make it clear.

 

Good luck

Steve