After-hours Report:
The most important structural queue for today's session was the A period look down and excess tail at a "no change" zone within the context of a daily super-grinder. With the overnight inventory 100% short it became clear early on that there was going to be no downside continuation due to the high odds of short covering. Today was one of the slowest creeper grind up days that I've ever seen.
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7:30 - Gap down of about 8 points. The overnight session was a steady grind down and closed almost on lows. Therefore, overnight inventory is 100% short. In our current super grinder up, any suspicious activity that does not confirm high confidence downside intent after the open, makes playing for further downside extremely dangerous. Especially with short term moving averages lurking as support on the daily.
At the close of initial balance, we have a low confidence balance with small A period excess tail -- a very low confidence structural formation for any sellers to hang their hat on -- probably for the rest of the session. It's not to say that this market can't move significantly down from here but, at this point, a move higher into the gap is the high odds play for now. So are false probes lower that get rejected. Sediment is moderate for such a decent sized gap down.
So, my visualization is for a meaningful gap fill attempt to at least halfway back of the overnight session level which would be just below the 1400 level. I think that the rest of the day structure will set its foundation within the next hour as we evaluate whether or not the gap can fill, and what the response will be at halfway back. If price can't put together a gap fill attempt, and starts to explore lower and base near the A period lows, than MAYBE the sellers have a shot at control today. But it's just not looking good for them at this point.
Range/ATR 5min:6 points/2.89
NYSE Vol: 8228
Sediment A/D&Up/Down Vol:-1500, -285k
Sector Skew: 161 down / 11 up
Most Up/Down Sectors:
Piplines +1.15%, clothing/apparal +.66% (mostly TIF earnings
Coal -3.66%, Steel -2.51%, Consume Elec -2.27%, Commercial Vehicle -2.19%
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Grade B: Overall, I saw structure well today. The only thing that I'd have liked to have fully internalized, and I only glanced over it, was how with 100% short inventory, and any lack of follow through will lead to short covering. I understood what 100% short inventory entails, I just was not explicit about it. And I should have pointed out that the excess tail was a utter and complete death knell to the shorts given the context in which it printed. I should have forgotten about talking about any downside.
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9:00-- Volatility is just dead. This poor market cannot muster anything greater than a 6 point range. The sellers must be happy that the gap could not even fill to halfway back before dying. The buyers must be happy that all the market could do was pullback and then reverse at value area low. As I'm writing this, just after 9:00, here comes another push back up to range highs. I'm going to wait a few more minutes before finishing this post to see if this market actually wants to move here. 9:15: Well, still low volatility and the small cap indexes are severely lagging. I still think there's a good shot that the 1400 level gets hit but as time goes on the odds are shifting for a 11:00 time frame move lower. The responsive buyers are just doing a really crappy job. We will wait through the doldrums and see what 10:30 or 11:00 will bring about. I think there's going to be a move either up or down from this balance zone before the end of the day. I guess, 40% chance up from this balance, 30% down from this balance, and 30% that it just balances. How is that for covering all bases?
Range/ATR 5min:6 points/=1.14
NYSE Vol: 1,360
Sediment A/D&Up/Down Vol:-1445/-471
Sector Skew:152 down 20up
Most Up/Down Sectors:
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Grade B: I think that upside should have been giving higher odds with the excess tail in place. But, yes, it was a weird day with a host of underlying weakness.
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10:30-- As unspectacular as it was up until this point, the highest odds scenario came to pass. A break above and test of 1400. It so interesting that my mind is so filled with clutter, yet I notice a strong tendency for the market to move towards the highest odds scenario that I visualize.
The question is "so now what?" 1400 was initially rejected but not substantially so, at least so far. The point of control is big at 1396, so it's going to take it a lot of volume to move price significantly away from it. And the look above to 1400 simply did not have a lot of volume.
I visualize the highest odds structure (70%) today as balance, to SLIGHT grind higher the rest of the day. I visualize a 10% chance for a significant move above the 1400 zone. And 20% for late day push lower to range lows. I just think there are too many positives to really push this market down. And there are just too many weak stocks and sectors for it meaningfully scream to the upside.
Range/ATR 5min: 8 points/.86
NYSE Vol:2,212
Sediment A/D&Up/Down Vol:-1168/445k
Sector Skew:31up/140 down
Most Up/Down Sectors:
Retail apparal +1.2%, Invest service 1.1%,Airlines 1.08%
Coal -3.87%, Expl&Production -2.51%, Platinum -2.5%, Comm Truck -2.33%
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Grade A: Great job! Even though today went up most all day, it really was a SLIGHT grind higher. The second half of the session smelled more of balance than trend.
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