One of the hardest daily patterns for intra-day traders to capitalize on is the double distribution. Where a large part of the morning session balances and then breaks out in a violent/high volume manner, streaking to new value. Then the rest of the day balances at the new value level. It requires a true gear-shift in thinking and the ability to identify quickly the huge volume coming into the market as value is rapidly re-priced.
Today's structure offered more than a couple clues before the 11:00 breakout (and the programs hit it exactly at 11:00). Big clues were also printed that allowed the astute trader to jump on and ride the "wave".
Pre-Break:
1) Overnight session took out the stops above yesterday's highs and closed the overnight session near the highs.
2) Perfect and high confidence open drive A period didn't look back and formed a multiple single TPO excess tail. Shorts are trapped.
3). The A period excess tail was never challanged as price could not exceed the B period highs.
4) A period printed a high negative cumulative reading of almost 40K on above 45 day average volume. Clearly, sellers were in charge right from the get go.
Break:
Heavy +50k volume in the ES printed right at 11:00. Volume figures like this during balance are unusual. And this information, coupled with the contextual negative structure listed above, said "go short".
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