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July and August this year have been atypical. After Labor Day is when the market picks up seasonally. The rest of this year is gonna be wild. I won't be surprised one bit to see a thousand point drop on the INDU and 100 point drop on the SPX. Not a prediction, just what I feel after being through a few bear markets.

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Could be that markets start to get crazy again, but also they might not. NFP just surprised to the downside and really that was worse than many were thinking. Some poor fellas look to have been done at 1198 just before the release - let's hope they were closing their positions.

Greece is again on the radar and talk of US banks being sued over MBS is not great. Looks like we'll open around the 1180 mark (although plenty of time to move in between now and open). So the first test of strength will be the current electronic low 1179.75 which is also Friday's RTH high, then high volume/Friday's close at around 1175. If it holds here, we'd need a test of the current RTH week low at 1189.00 and preferably get above 1190.25, then yesterday's low/close 1200.75/1201.25 - also psychological 1200 mark. If not we could well see moves down to 1163 area and beyond(and possibly anyway). One thing to note is we have moved down somewhat already in the ETH.

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First off, I hope everyone had a great holiday weekend. Here's a first look at the ES post Labor Day declines. The two things to bear in mind here are that I have done this chart earlier than normal so the rest of the electronic session needs to play out and I am looking at what we did on a holiday meaning the importance attached to it may not be as great.

 

What ES did do though, was test an important high volume area and fail. It also was playing again with the low volume between 1153-1149 area after having gapped through the 1163 high volume area. If we are above the 1138 level, I would want to see whether we get and stay above the 1153-49 area for a potential test of 1163 and the gap to 1169.75. Fall much below it and I'd be looking for us to test 1132.50 and 1118 ish to begin with.

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Sometimes in the likes of ES it's difficult to not want to fade a move at a given level. I think it's difficult for many and the nature of the ES is such that often it will return to previous prices once certain targets have been achieved. So the question is how to protect yourself from trend-like days. Yesterday, even though I had a plan that above Friday RTH high 1185, I would be looking towards a gap close around 1200 mark, I had in mind a couple of hurdles which may have given me some good short opportunities. I actually hate these 'grinder' days but after taking a couple of shorts pre-1189 and not faring so well- which was a level at which it became apparent we had interest, I felt it was be becoming quite clear that we had a grinder potentially with a number of factors and importantly the way it 'felt'. Not much out eco-wise either. So I looked for an opportunity to get long. I did at a price area which I had thought may have been a possible short as the action here gave me confidence. That went much better than the other trades.

 

Anyway, the point of telling you this was that it's good to have a flexible plan and be aware of how the market is behaving, otherwise you'll likely just get steam rolled when the ES is in this kind of mood.

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Given that it's roll over for us today, I am going to be taking it easy trading-wise. I prefer for the roll business to clear myself before trading it. So I won't suggest what I think it may do. If anyone has any comments about trading roll days, post them. I know some do like trading "the roll" and do well.

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Interesting technically over the last week or so. It sort of feels like the markets can't make up their minds although the failure to take 1200 (and attempt above 1223ish) last week I see as negative. Anyway take a look at my chart.

 

We closed right on the high vol at 1157.50 and overnight so far the high was low vol at 1166 ish. I do feel the test was a bit lame though and although price has recovered from the earlier test lower, it is still exhibiting a trend lower. Basically though ES has been in the low volume area kinda hanging around. What's important though overall is what happens in the RTH. I think we need to test the 1166 again and gauge strength into it. If it's strong, next up would be 68.75,75.50,80.50. If it's weak, I want to see what happens in 30-40 area and if a proper test of low vol below can happen.

 

What are you making of crude right now josh?

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I feel that at the moment we could go either way. Last week not breaking above 1200 was not good imo, but clearly buying over the past couple of days is positive. I'd like to see what happens around the 1184 area as I feel at least short term on the upside, this could be important. However, 1195/98 could also cap us on the upside if we get more excited. On the downside, I'd still be watching the low volume area below and then what happens in high volume centred around 1137.25(blue profile).

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What are you making of crude right now josh?

 

I looked back and just saw this question at the bottom of your post that I somehow missed the first time around.

 

Well, we bounced off of support-turned-resistance yet again, and there is a beautiful bear flag (well, more like a wedge) on the daily that really wants to break to the down side. If I had to guess, I would guess down. But perhaps that's too obvious, so maybe up is the direction :)

 

But from a day-to-day trading perspective, I've found that it only serves to mess me up when I develop a bias longer than the current day's action. So many factors at play, the best bet for me personally is to get up in the morning, see how the market acted overnight, see where price is trading relative to yesterday's or last week's or some other period of time's value (whether it be the VA, VWAP, etc), and work off of that information. In times past I have thought "market needs to go down from here.." and sometimes I'd be right, but even when I was right, it didn't help me really make a good trading decision in the "now" moment during the day; and when I was wrong, I would simply trade the wrong direction. So currently I try to just evaluate what's going on today, and take each trade one trade at a time!

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ECB just announced US liquidity operations in Q4 which caused the spike just now.

 

Anyway, yesterday was pretty good for bulls even if we didn't manage to take out 1198/1200. It looks like a decent volume base has come in at 1166 and so long as that area is held there's a good chance ES will target 1224 last swing high and 1232(1237.75 before back-adjustment). I'm sure today will provide plenty of volatily and chances to profit, but I'll be keeping on my toes!!

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Hi Josh,

 

Thanks for sharing. I constructed a longer profile for crude to view in a slightly different way from you.

 

(please ignore the small profiles in the middle blue profile - forgot to remove!!)

 

Thank you for your chart Negotiator.

 

Particularly with all of the volatility in August in oil, with a lot of that being in the globex session, why do you prefer to use the RTH chart?

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The volume is just way lower outside rth. Maybe if you could normalise for volume outside of rth or even normalise price and volume from brent you might get a better idea. I just think that the volume that is done is what is important because that is the basis of underlying positions. I know lots of big moves happen outside of rth though.

 

I just put a 24hr version of the profile next to the rth profile. 24hr is on left.

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If a selloff gets going then you could see the market pulled toward high volume 1157.50 area with some potential for stop offs at areas I've marked on the chart. If we can move back up during this session, there is 1200 to take out then 12/13 area for me will be a key test.

 

Greece chatter and FOMC Wednesday might make this a volatile session, but as always well have to see.

Mondayprefomc.thumb.JPG.f990e35042e8a6346458e447beecf35c.JPG

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