Afterhours Report: I added into my post today tactical trade entry analysis. As it turned out, the two trades framed today both worked perfectly. I'm also finding that the increased workload of this journal is not a negative. It increasingly assists my focus and engagement with the market. Someone who has watched the market on an intra-day bases, all day long, will probably have great respect for how hard focus can be to achieve. Especially as an independent trader.
NYSE volume 3,655M
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7:30--The initial balance is closing on its lows. And trying to extend lower. Sectors are extremely skewed with only three positive. But the leading negative sector is only down -2.76%. The move down from the open has been low confidence and choppy. The overnight session closed with a spike down and only closed a few ticks below yesterday's range lows. Emotional short inventory could get caught short easily. Value opened at the lower end of yesterday's value. The market is down now three days in a row. It's not a robust and high confidence down move whatsoever -- for any of the down days. That's fine when the market's going up but it's so suspect as the market is going down, let alone during a confirmed daily super grinder higher.
Range/ATR 5min:6 points/ 2.46
NYSE Vol:765
Sediment A/D&Up/Down Vol: (-1765)/ (326)
Sector Skew: 4 up / 168 down
Most Up/Down Sectors: Healthcare +1.24%, Biotech .24%
Home Construction -2.75%, Insurance Life -2.06%, Hotels -1.95%
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Grade A: You were able objectively process evidence as it unfolded. I liked that you noticed, even with almost all of the sectors being red on the day, the leading loser was only down under 3%. And how the move down from the open was choppy and low confidence. It was also good you noted how the prior down days were choppy and low confidence too. The whole post was relevant and spot on in ferreting out the fact that this market was going to go short in the hole later in the day. You were not finding any structural evidence at all to make a strong case for further downside. You respected the possibility, but were going to let the market prove your upside bias wrong before changing bias.
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7:37 -- Still continuing lower and this market is right on the daily 20 day moving average. Any failure to continue down here will have me on reversal watch. The market has been printing a lot of tick -800s and the sellers are not getting very much for their efforts. My best structural guess is that this market does not trend down today. And given the low confidence lead in to the daily 20 day moving average, I highly suspect a buy response too. Retail and Biotechs are the two sectors that are diverging to the upside. Nasdaq and Russell and the XLF are in sync with ES. Muted inter-market themes with a negative bias.
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Grade A:I liked in this post that you added even more structural evidence that contributed to the upside bias. You were focused enough to look at the daily chart and realize that the 20 day moving average was lurking below.
And important too, you noticed the plethora of negative tick -800 readings that were not able to take the the market down much at all. This structural queue became even more pronounced as the day went on.
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7:45 -- If the buy response does take hold here at 1386.50, and rotate higher, I will probably buy near range highs for a high odds move into the gap fill. Or if the market bounces and makes new minor lows in a transitional structure, that will be an interesting buy point to consider as well. If the 20 day completely fails, then tactically, I'll have to re-adjust my current long bias. No excess tail at lows to note.
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Grade A: This type of post is new to my journal. It specifically addresses framing tactical entry points. Both of the tactical entries formulated today worked perfectly. The transitional low at 9:00 long. And the base at range highs in the afternoon long into gap fill.
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8:15 - Market is at POC and halfway back now. TICK is in strong up trend with no readings above +600. With emotional overnight shorts, however, I think that the low of day is in. If price continues to base above the value area low, then I think odds are good for continued rotation higher. Fly in the ointment is the XLF which is stubbornly refusing to bounce from base at lows. Nasdaq retests lows to the tick and bounces -- so far. The over-arching consideration here, however, is the daily 20 moving average offering support here. Plus with a reversal before 8:00, this always increases the chance of a bullish check mark pattern.
8:30 -- New lows XLF and nazdaq. ES at VAL. Stiff VWAP reversal has market near session lows now. Will be on lookout for transitional lows to buy, if other indexes and XLF can gain some traction. But so far the " flies in the ointment" that I noted were very valid considerations. So now we see if a transitional bottom can take hold here or not.
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Grade A: You were keenly aware that there were some issues with the long side. I like how you noticed that there were still aggressive downside sellers in play. You were not going to just jump in arbitrarily but created a tactical structure upon which you were going to base your trade entry. In this case you were looking for a transitional low. And you're also not just lost in the 5 minute chart looking at price. Your vision was constantly attuned to what was happening on the daily chart.
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9:00-- A new minor low and transitional low is printing right here at 9:00. This is the entry that we were waiting for to the long side. Even though the XLF and NASDAQ are diverged, this is the zone and TIME OF DAY that we want to put on a long side trade. Should the reversal take hold, the first task will be to break above the vwap, then the value area high, and then tackle range highs. This trade is higher risk because of strongly skewed sectors and sediment is a very strong -1800. And the ES is the lone ranger, not printing new significant lows like the other indexes. I like the emotional overnight short inventory too. But this intraday trade is based on the daily chart.
If the trade does stop out, I will not aggressively re-enter. Drip down days are always possible -- and just when everything looks tired and diverged, it moves down another leg. And then the reversal hits the following day!
I Visualize that if the 9:00 lows at 1386.25 hold them there's a good chance that this market closes on its highs. If these 9:00 lows are taken out, by more than a minor new low, than I visualize a slow grinder down day. But with the short overnight inventory and daily support, I think it's higher odds that responsive buyers step in here.
Range/ATR 5min: 8 points /
NYSE Vol:- 1,604
Sediment A/D&Up/Down Vol: -1845 / -664
Sector Skew: 5 up / 167 down
Most Up/Down Sectors: top ten declining sectors down a collective 2.5%. Still nothing really puking.
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Grade A: You called it perfectly. I really liked noting the overnight inventory nuance. Panic spike moves in the overnight are emotional. And emotional, panicky shorts were primed to be squeezed.
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10:30-- After a slight rejection of the value area high, price is basing right at the vwap and the 5 minute chart has a bowl shaped pattern to it. I'm not really into generic technical patterns, but this type of pattern is definitely more bullish than bearish, given the overall context of the day. I'm still visualizing a move higher but the simple fact is, it's taking a little bit too long to materialize and that is making you wonder what's going to happen when the 11:00 programs hit. I think that 11:00 is going to usher in movement up/down that I'm going to respect. I will quickly exit my position if lows are tested with vigor. Inter market themes are neutral mixed. There's not really much left for me to analyze here. We just have to wait and see what the program's want to at 11:00 o'clock.
One thing that I'm sure of is that this market has a total of 14 -800 hits on the tick. And all of the sell programs have not been rewarded for their efforts -- at least not yet.
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Grade A: Noticing the strong tick inefficiencies was key.
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11:00 -- Like clockwork the programs came in and so far they're bullish. We're currently peaking above the value area high with a tick +1000 high of day reading. We now need follow-through on this tick high reading. Or else it could just be another value area high reversal zone. As long as the vwap holds as support, I would strongly expect further short covering, possibly rapid movement up. OK, here comes the move, let's see if we were correct about visualizing a rapid ascent from here. A period highs will be strong resistance.
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Grade A: You were spot on in visualizing rapid movement up, once it got going.
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11:20 -- Here come those A period range highs. Now it's just a question if there are really any significant amount of trapped shorts or if we will hit this level and reverse. TICK bodies are holding well here and increase odds of continuation higher.
Range/ATR 5min:
NYSE Vol: 2,149,000
Sediment A/D&Up/Down Vol:(-1600)uptrending / -858k downtrending
Sector Skew:8 up / 165
Cumulative Delta: +17k
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Grade A: Here is annotated chart, showing the pre-breakout TICK distribution.
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