7:30 -- Balanced overnight inventory with the high of 1403, just above our 1400 reference level. Overnight then fell and opened near midrange. Initial balance now is within the overnight value area and largely within the prior sessions value area. Although value is unable to move above the 1400 level, it has also not gone down and therefore "nothing has changed". But I do think if we are unable to rally above the A period 1401 highs, and stay there, I visualize possible selling. Apple once again has hit the 600 level and was rejected, therefore, the NASDAQ has relative weakness so far. There are no sectors, either up or down, that are unusual. However four of the S&P sectors have a relative volume above two, which is unusual. And three out of four of them are red on the day. So we sit back and wait to see if this market can kick aside any of the potential downside divergences and grind its way above 1400. My best guess visualization is that the day is a balanced day with a slight upside trend.
ATR/Range:5 points, 1.5 pts. 5min
Sediment: +400/+109 up vol
NYSE Vol: 935 mil
Most Up/Down Sectors: metals +1.7%, Homebuilders -1.2
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Grade C: You did good seeing that there was no change and that the upside had high odds. That's all fine and dandy but this edge is useless when you are biased to the downside. You were clearly biased that 1400 was going to turn this market even though you had no BLATANT evidence to support this bias. You didn't even mention the dollar screaming lower.
You also missed the fact that overnight inventory was slightly short. There were no overnight longs to re-balance. I also remember noticing the divergent financials to the upside, but pointing out that information would have messed with your bias. Wouldn't it?
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9:00-- This journal once again has helped me to realize that it's quite common for high odds scenarios to unfold. In my first post, I spoke about potential selling if the 1400s were not be taken out. But why wouldn't they be taken out? Pretty much all of my analysis found no substantial red flags whatsoever -- and a lot of good reasons for it to go up. Like "no change" for example. I correctly visualized a upside move despite being biased against a successful 1400 breakout for some reason.
With the Euro screaming higher, and the dollar screaming lower. And many financials diverged to the upside, there was a lot of opportunity to be long the indexes before the successful break above 1400. As I write this post, trade is at 1404. With a fresh breakout in play and strong sector participation the double distribution should probably hold and I would expect a grind to balance higher for the rest of the day.
Range/ATR: 8 points/2.1 pts. 5min
Sediment: +1000/+355 up vol
NYSE Vol: 1662 mil
Most Up/Down Sectors:
metals +2.5%,casinos 2.4%,steel 2.3%
Homebuilders -1.2%, Costco -.83%
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Grade A: I'm happy with this assessment. Too bad that you were lost in bias to not take the trade.
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10:30-- Price is now at 1407 with a high of the day of 1408. It is a slow, low volatility, but high confidence grind higher. Double distribution days have low odds of failing so I'm going to stick with my visualization of a slow grind higher to balance from here on out. At some point this trend break out move will most likely go from trend to balance. Inter-market themes have kicked in with strong moves such as bonds with a expansion move down. The Euro is basing at its highs, the dollar is basing at its lows, and the VXX is still screaming lower and down over 6%.
ATR/Range: 12 points/.93
Most Up/Down Sectors:
metals +3.5%,casinos 3.4%,steel 2.7%
wireless communications -.95%, Costco -.50%
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Grade A: This analysis is clearly a result of accumulated knowledge. Double distribution breakouts upwards, in the morning, can trend for a while but usually end in some sort of balance.
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After-hours:
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After-hours Report: Key for today are the dynamics in play prior to the morning double distribution breakout occurring. During the first 2 hours of the session, it was clear that the upside case had a lot of strong information supporting it. And the downside case had a few divergences here and there but nothing to supersede the upside high odds probably in the midst of a super grinder higher.
The big take away for today, and this is not new to my brain, is that IF the super grinder up is going to be jeopardized with a big sell day, there are going to be BLATANT and very obvious structural cues. Which of course there were not any today.
Here are the main themes in play today that I believe were plainly advertising that the upside move was on its way. Most of them I have already noted, but as they say: review, review, review.
1) The initial balance based within the overnight value area, which was unchanged from the prior session's value area. "Nothing has changed" Is something that I've been saying a lot and this is a perfect instance of it being crystal clear. Value was being accepted and there were no indications whatsoever that the downside was at all in play. Therefore, in a super grinder up, default odds are that value is going to probe higher.
2)The XLF and a number of financial stocks were leading the way higher and significantly diverging to the upside vs. the indexes. This fact alone is not enough to ensure an upside breakout, but it's practically a slam dunk fact that the downside has little or no chance.
3) Leading upside sectors were stronger than the leading losing sectors were weak.
4) Inter-market themes: the dollar was plunging and the Euro was searching higher and the bonds were moving down. All while the indexes based near highs.
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