After Hours Report:
The session's structure became obvious fairly early in the day with the low confidence down move lower. The market was ripe for short covering all day long. I think that the sellers got away with one today, as it could've been a lot worse for them. It will be interesting to see if the buyers come in tomorrow and drive price back above 1400. Or if the destination has not been hit yet and the lows of the range at around 1370 are the target. I'm leaning a little bit towards the downside tomorrow simply because the responsive, upside trade seems a little bit too easy and predictable. Plus I think if the buyers were really out in force today, they could have ripped it higher today in spectacular fashion.
NYSE Volume: 3,654,000
Globex Session Visualization Guess: Up from the close and a gap up of some sort tomorrow. Follow through will largely depend if the 1400 level can be breached.
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7:30--A 11 point gap down and value sits near the midpoint of a multi-week range. The tight range in A period has given away to slight range continuation to the downside as initial balance closes near it's lows. Despite the sediment being negative extreme and nearly all sectors red, I want to note that initial balance was decidedly low confidence. Of key importance, the 20 period moving average on the daily is right at this level. Sellers have had a notoriously rough time with any push down, so we'll be monitoring selling confidence closely. The low of this range is 1370 and I would not expect a move down to that level today given the low confidence structure in place. Intermarket themes are negative but are all in tight low confidence bases.
Tactics: A meaningful move up from the initial balance lows will immediately trigger a gap fill alert, as this market is so responsive by nature right now. I want to see more of a transitional low put in to go long. And I want to see more evidence that the shorts are trapped to go long. I'm decidedly not excited about the short side with such low confidence and the 100% short overnight inventory. Especially when the overnight has made such a big move. But I am a respectful that there could be more downside and low confidence morning moves down can easily grind lower for awhile.
8:00 - The point of control from 3/29 has triggered a minor buy response here at 8:00. A move below this level would target the lows of 3/29 at 1386. Below that, as we've mentioned before, the range lows of 1370. The selling has been tired and low confidence. A successful 8:00 reversal here would not surprise me. I think odds are that the lows of the day or in at this point. And I will be on watch for a strong to shift the momentum to the upside. 8:22 -- entering a long trade here at 1391.25 as the sellers can't muster squat.
Range/ATR 5min: 4.5 points / 2.45
NYSE Vol:889,519
Sediment A/D&Up/Down Vol:
Sector Skew:8 up / 164 down
Most Up/Down Sectors:
Airlines up +.20%, tobacco +.07%
Gold Mining -2.90%, Recreational products -2.75%, Platinum -2.50%, Non ferrous Metal -2.50%, Home Builders -2.25%
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Grade: A -- Even though the market did print a minor new low at 11:00, you were spot on in gauging how low confidence the selling was. Combine that with very short overnight inventory, and watch out shorts.
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9:00-- Sediment is still firmly negatively flat lined at -2000, but so far the 8:00 lows at 1389 are holding. A rally off the lows came back to halfway back and stalled. The inefficiency of the multiple 800 and 1000 negative tick readings was a clear signal to take on a upside bias. We entered a long trade at 1391 and will probably hold it for target of near the top of today's range. The structure now is definitely looking as though the market could go short in the hole at anytime. And this exact time of day can easily serve as a catalyst. I visualize that there is an 85% chance that the lows of the day are in and the market closes in the upper part of today's range.
But the vwap has proven to be strong resistance all day long and if price cannot break through it, then later in the day the odds will shift more towards lower prices and a possible continuation break of range lows. But with so much short overnight inventory and no excess above, any low confidence selling like we've seen today can really trigger the shorts to cover.
8:30 VWAP continuing to act as resistance as our 9:00 rally is going nowhere. TICK moving average is in a fairly steady uptrend, however. But the fact is if they can't
get through the VWAP, then our upside thesis is in jeopardy as late session sellers could be emboldened.
Range/ATR 5min:10 points / 1.61
NYSE Vol:1,686,000
Sediment A/D&Up/Down Vol: -2000 / -945
Sector Skew:10 up / 162 down
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Grade: A -- I liked how flexible you were to have a strong opinion that the lows of the day were in, Yet you were able to amend your position and take into consideration that the vwap was holding so firmly. And this observation was relevant as price did print a minor new low. But you were over all correct in your assessment that the shorts were in the hole and it was not going to be a day of downside continuation.
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10:30-- Well, the vwap held and that quickly shifted the odds for a test of the lows. And that's what's happening right now. Sentiment remained stubbornly negative at -2000 readings, and the NASDAQ is dragging the other indexes down with it. I don't expect the look down to have significant continuation. I think it's more or less just going to be stop running. But I'm not inclined to buy it just yet and want to see if the sellers are going to reload for another push or if the minor low was it. Ok, looks like just a minor low, stop gun, and XLF is diverged. We will try at long here at 1389.50. A failure of the responsive buyers to make this trade a winner would definitely be a big change of character, and have me standing aside to re-evaluate.
10:55 -- Price is back to vwap again. The tick is strong and registered a plus 800 reading. So we wait to see what the 11:00 programs will do. With the minor low in below, I think there's a good chance that this market tests 1395. And, depending on how energetic the move up is, I might even consider playing for a move into the gap.
NYSE Vol:2,239
Sediment A/D&Up/Down Vol:-2000 / -1283
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Grade: A. Nothing wrong with your analysis as I see it. You quickly identified the minor low print as a good long trade, and the market tested the 1395's. You were not suprised or faked out about anything.
1st trade -1, 2nd trade +4.75
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