Tuesday, April 28, 2009

Premarket Briefing: Tracking Volume and Sentiment Shifts

Here's a pre-opening snapshot of the ES market. Note how we had strong selling (and volume hitting bids) early in the morning and then a drying up of selling as the morning progressed. It was after that drying up that we began to see volume lifting offers in the last three 30-minute periods of the chart (bottom histogram). Notice how you could identify that sentiment shift prior to the market's lift off move that took us back to the day's VWAP (red line). As of my writing this, we're seeing some sellers greet the rising market at the 845.50 to 846 level. That creates an exit for short-term traders and it represents the formation of a possible resistance area for those looking to hold. Here's a very nice article from MG Trader on high volume regions and their trading significance.