We broke to a daily low in recent trade in ES; that low, however, was not confirmed by the NQ futures or by the XLP, XLV, and XLK sectors. Note also that volume did not expand significantly on the break.
When I'm working with traders as they are trading, we are looking not only at what is happening (price change), but also at the themes surrounding the action (intermarket behavior) and the degree of participation in the market moves. It is when participation expands on moves to new highs or lows--as we saw on strength yesterday--that those moves are most likely to show continuation.
.
Posts
3 comments:
I would have to disagree with you Brett. Volume deltas are expanding in the context of the overall market on the 5 minute chart compared to any up delta during counter rallies. Also in the larger structure, the 1067 from Oct 2008 was a key that was taken out and rejected in Globex, and then the stops were run above the Globex high during the day session, then after than, there was no significant volume above the 1067-1068 area. At that point my bias turned to the short side. I think the negative volume area from yesterday in the 1055-1058 area could be micro support, but have some areas that could be tested based on negative volume from the 1020-1030's, if buying volume doesnt come in and the tick remains weak, I think the 1050-1053 is a good target if you shorted the 1067-1069's. Lots greater than 2oo are selling the leg down from the 1069's, and are expanding their participation on the way down. I am looking to see where the green deltas are on these small counter rallies. 1063 is a key that shouldnt be breached if we are to continue lower. Thanks for your insights. Best, SSK
Great point, SSK; inability to trade back above 1063 suggests that we're accepting value lower over time.
The very short term traders I work with will cover short positions on breaks to new lows if those breaks don't see good participation. They then look to reenter the short position if we can only muster a feeble rally off the non-confirmed lows.
Brett
Yes indeed! The time frame makes all the difference! Thanks agian. Best, SSK
Post a Comment