After-hours report: This was one of those days that looks so easy in hindsight. The midday action tightly oscillating around the vwap in a two point range and putting my mind to sleep. Hard to deal with. And even the afternoon breakout was really slow, lazy volume. But there was one thought that was going through my mind all day long: "if they don't take it down, they're going to take it up". And that's what happened.
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7:30 -- A gap up of about seven points tightly coiled and then broke higher to a HOD print of 1406.75. A slight pullback looks like it is headed for the vwap. Bonds are in a strong trend down and the Australian dollar is in a strong trend up: Positive for the market. Semiconductors are leading the sectors up and the homebuilding stocks are leading down along with regional banks. So again we have a fairly large gap up with little continuation: Mixed for the market. Additionally we are close to resistance on the daily chart of the high and made last week. Last week high of 1408 is probably the destination for today. If price stays above the vwap I visualize a slow grinder up today to the 1408 destination target. If price continues to base on or below the vwap for the next hour or so, without new highs, then I will anticipate a move down into the gap. A rule of thumb for big gaps, is that if they don't continue higher with confidence at the start of the day, the odds quickly shift to some sort of gap fill attempt. And so far we don't have that high confidence initial balance I need to hang my bullish hat on.
Range/ATR 5min:6 points / 1.21 / 7 point gap
NYSE Vol:818k
Sediment A/D&Up/Down Vol:1700 / 370k
Sector Skew:163 up / 9 down
Most Up/Down Sectors: Recreational Product 2.47, Hotel/Lodg Reit 2.10, Mortage Finance 2.05, Heavy Construction 1.89
Home Construction -1.14%, Coal -1.07%, Pipelines -.40%
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Grade B - I cannot give myself in A because I was wrong that the base below that vwap did not in fact did not produce a downside event. Still, all year long, for every big gap up,the base below the vwap produced some sort of movement into the gap. So, I was just really uncomfortable to go long, and I wasn't comfortable going short. It was just an iuncomfortable day and I;m glad that it is over with. But I was right that the destination was above.
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9:00-- A longstanding base here right at the vwap. This pattern has shifted the odds now to a downside test into the gap. One big mitigating factor, however, is the outperformance of the NASDAQ and Russell 2000. However the energy sector, materials, and home builders are aggressively being sold.
After a big gap up. and extended base near lows like today, the odds start to shift to the downside if the market is not unanimously signalling higher. My best guess is 30/60 up versus down from here. I think that it's low odds for it to just flatline from here on out for the rest of the day.
Range/ATR 5min: N/C / .71
NYSE Vol:1,387,000
Sediment A/D&Up/Down Vol:1528/ 628k
Sector Skew:161 up / 9 down
Most Up/Down Sectors:
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Grade B: I was ok with my analysis, but just wrong today. That upside visualization early on about the VERY VISUAL 1408's being tagged was the game play for today.
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10:30-- The market is dead. But it is creeping lower, if three points off the highs can be considered "creeping lower". Bonds have a strong recovery spike, which should be bearish for the market. As I'm writing this just after 10:30, a creep towards the highs is in gear. Odds have shifted now to just a tight balance day.
But with a 2 point range now for over three hours, It's really hard to visualize anything while fast asleep.
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Grade D: I just don't see how odds shifted to a tight balanced day. Especially when in your previous post, you mentioned how low odds it was for today to just flat line rest of day.
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11:15 -- Market is at highs now. So it looks like the 1408s are probably going to be tested. Or will it just a retreat from the highs? So far no volume is coming in of significance. I really hate to enter a trade either way here. Apple has been screaming to new highs so that fact alone really helps the upside. Bonds still climbing.
12:00 -- Stops just got run as price shot right to where the liquidity was -- at our 1408 destination. HOD now 1409 and a slight pullback. Still no major volume. So either that was it, or it just grinds higher last hour. It feels like a higher power wants it higher, though. I will not even entertain the idea of a short. And it's high risk for a down spike too since price is at the visible reference and only be able to minor high thus far. This is just a market that I want no part of.
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Grade A: My visualization that "a higher power wants it higher" was spot on. Late session short covering took out the visual high with force. If felt like short covering to me. So if they take this spike back tomorrow, it could get ugly.
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Range/ATR 5min:
NYSE Vol:1,916,000
Sediment A/D&Up/Down Vol:1400/790k
Sector Skew:no change
Most Up/Down Sectors: no change
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