Hello Big Red

After yesterday's Fed balance, a true trend day unfolded today with ES volume 2.5X normal, A/D sediment -2500 and price down 2%.

A classic institutional trend day.

Hello Big Red!

So many times, during this bull market, big volume down moves like this have been bought.

With all of the short inventory, we have to be on the lookout for a two way auction process short covering tomorrow.

But, there is always the possibility that a we may have a solid downtrend on our hands.

But that is a scenario that will have to prove itself.

Should any buying start to take hold tomorrow after a low confidence move lower, one must be very careful stepping in front of that train.

We feature the trade of the day quite a lot around here.  But today's trade of the day gets special allocations for being structurally perfect.  You won't find a better mid-session continuation short set up.

VIX up over 27%.  You have to love it.

Two way auction process!

Today was a little tricky intra-day without a lot of accumulated experience.

But with yesterday's squeeze event, I was very suspicious of the mid-session base above VWAP -- Normally a high odds situation for further movement higher.

But structure gave it's clues.

No huge flags by my eye to anticipate further downside -- other than the fact it's about freaking time for a Big Red.

But I'm not going with downside unless blatant structure indicates to do so.

High odds, the inventory goes back higher again tomorrow.

Buyers Will Be Buyers

Ah, bull markets.

Initial balance inventory look down reversal and VWAP respect -- two nuances to embrace as a day time frame participant.

Trade of the day buying that VWAP pullback.

As Expected

Our analysis was spot on as the market gapped up and probed new all time highs.

But TICK was very lethargic at a very important minor high zone, and a little bit of inventory correction came into play.

For tomorrow, we are a bit worried about the minor high as a buyer.  And as a seller, we are really worried about the fact that it's a picture perfect bull market.

Odds go to the buyers.  A failure quickly shifts that to the sellers!

Bull Checkmark

We said lower was low odds on Friday, with balance or breakout most likely for today's session.

What we got today was typical bull market structure.  Small gap down, low confidence move lower, and a mechanical reversal at 8:00.

And from there it was just short covering as the balanced check mark day unfolded!

All systems go for a breakout to new highs unless news comes in. 

Two Way Auction!

Can you say "two way auction process"?

Yesterday's rip lower produced a rip higher for today!

Once the short covering got underway from the morning 90 minute balance, a clear trend day higher unfolded.  With all of the laggard shorts caught from yesterday, the structure was as clear as a bell.

The overnight session stop gun, rip out, was classic too.

Come Monday, this market probably breaks out to fresh all time highs.

But after to rip-roaring days, a balanced session would not surprise.

3rd Day 9:00 Response

Markets came alive today on the heals of the initial balance HOD reversing so perfectly at range highs.

Skyrocketing VIX:

But intra-day was still very programmed, and a 12:00 east coast time bounce occurred yet again for the 3rd day in a row.  Nice trade there.

But the upside move failed and the coil at range lows triggered a nice liquidation event down to multi-week lows.  With the double top high in above, that was good structure in which to engage for a short side try. I'd have taken if at the desk.

More falling after hours as I type this:

Is this market finally in for it?

Or do the programmed buyers step in again?

Hell, it's going to take WW3 to get this market down.

Or will it?

Same As Yesterday

Today's action was very similar to yesterday's.

Morning inventory auction lower and finding support at 9:00, with balance for the rest of the day.

Volume Coming In

Volume way up today and volatility expanded.  Almost a 20 point range.

Nice gap fill reversal trade long.

Mechanical 9:00 LOD print on a fresh minor low.

From there, any sane trader soaked his mind in just how transparent markets can be, and to forget about more downside.  The rest of the session was balance around the prior day's pivot.

Two way auction process indeed!

Another sell day that crapped out.  We are looking for buyers to step in tomorrow as per usual.  That it, unless something has changed.