Tuesday, June 16, 2009

From Range Trade to Breakout: Making the Identification

One of the topics I'd like to cover in the summer seminar in Chicago is recognizing range vs. breakout trading conditions. The Market Delta chart above (click for detail) shows how we broke below the volume bulge mentioned in the intraday tweet (921-924) and found increased volume/participation as we broke the overnight lows and then broke below Monday's low. It is the acceptance of price at lower levels that creates a shift in the market's estimate of value. That acceptance, demonstrated by increased volume-at-price, is our best indication that the institutional traders/investors that move markets are participating in--indeed, leading--the weakness.

If we can get conference room space during market hours, perhaps we'll be able to track some of these ideas in real time. More on the seminar to come...