Tuesday, August 07, 2007

Microanatomy of a Market Bounce

If you click on the chart, you'll see a nine minute period of the market under the microscope. The chart shows where the ES futures were trading at various levels of NYSE TICK. You can see the zero TICK line in red, showing us that the most recent distribution has been positive.

Note the pullback in TICK from 10:49 through 10:52 AM cannot take us meaningfully below the zero line and also retraces only a small portion of the prior market move.

This sets us up for the next surge in TICK and a nice short-term move.

In a bull swing, this pattern sets up many times.

Chart created in e-Signal with prices overlaid with a graphics app.