After successfully testing the overnight lows in the morning, the ES futures (above, Market Delta chart) have steadily moved to new highs, staying above their volume-weighted average price (VWAP; red line).
If you click on the chart, you'll see that Cumulative Delta on the day is actually negative as of this writing (blue line, bottom of chart). That means that more volume has been transacted at the market bid (sellers aggressive) than at the offer--unusual when the index is up on the day.
Accompanying this relative weakness of sentiment is the fact that the NASDAQ 100 and Russell 2000 Indexes have not made bull highs today and five of the eight S&P 500 Index sectors that I track weekly are actually down today from their opening prices. Overall, only 266 more stocks are advancing than declining on the day.
In short, it's a rally, but one with narrowing participation going into tomorrow's economic releases.
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2 comments:
Dr. Brett,
I have a question that I've been meaning to ask you for a while. Sorry that it is off-topic.
It concerns edge in the markets, and what separates the profitable traders from the many unprofitable ones.
School of thought #1. The profitable traders have some secret system that no one else has figured out. They're doing something no one else is doing. Information that is readily available in the public domain is of very little value, because that is information that everyone else already has. You can't stay ahead of everyone else if you are using the same information that they are using - there is no edge in that. The US military doesn't share secrets with other countries, and as such great traders shouldn't share their secrets with their competitors.
School of thought #2. There is no holy grail such as the one implied on the first school of thought. Trading success is no different that success in any other field. The best MMA fighters aren't so good because they have some top-secret way of throwing punches, they are just more highly skilled. The best professional gamers aren't so good because they are using cheats or have secret power-ups, they are more highly skilled. Just like any other performance field, trading success is down a combination of work ethic, intelligence, innate aptitude, positive attitude, and so forth. (Yes, I know, there are the Mark McGwire and Sammy Sosa's who break records by cheating, but you get the idea.)
So Dr. Brett, since you have worked with many different kinds of traders in many different settings, what is your opinion on this? Which school of thought is right, or is the truth somewhere in the middle?
Many thanks.
I 'screwed the pooch' today, cognitively speaking.
Notated Chart
http://4.bp.blogspot.com/_GCk1spliaTo/S0ZohKDLZwI/AAAAAAAAAas/tH3nY9G_NMw/s1600-h/LessoninCognitive.png
More info here:
http://implicittrading.blogspot.com/2010/01/todays-lesson-error-in-cognitive.html
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