Discussion of todays action in NQ:
NQ opened Mondays session 'in balance' --- near 1948.00
POC from friday... then did an instant flush down below Fridays low to 34.25 (-13.75 from
POC) to wash out weak holders before launching higher. I was looking for a reversal below fridays low for a long but it was a quick-spike-whipsaw which led to tougher trade location for a long as it pushed back into the choppy range from Friday. NQ found a little resistance near 'last hour high' at 1952.00, forming a bull flag that led to a 2nd push up reaching 56.50.
NQ then began to trade down before pushing a 3rd time up into the lunch hour timeframe. Volume and breadth during this entire move were mediocre.
On the final push up, a price/momentum divergence formed on both the 15-min and 1600-tick timeframes -- my primary pattern focus timeframe. See attached chart which shows this divergence (price new high, oscillator lower high). It is not uncommon for a 15-min divergence like this to mark the high or low for the day.
http://bp0.blogger.com/_5h-SWVGx6Ms/...ne+25+2007.bmp
NQ chopped slowly lower in somewhat bizarre action for NQ (it tends to move around quickly). The days
POC formed here at 1953.25 -- the market appeared to have found balance.
Not long after this, we had a break away from balance as volume picked up sharply. This pattern had general feel of a head & shoulders topping formation on YM and ES (NQ not so much) but the markets drifted down slowly for the first leg creating difficult location to take a short. I would be happy to hear how others may have entered a short here. To tell the truth, I was thinking about taking a long on YM but it just fell and fell and never really came close to triggering me in with parabolic break to the upside.
By the close, we still have an afternoon 'trending profile' to the downside on accelerated volume -- but the market close of 40.75 is 12.50 points below the daily
POC. This creates an interesting situation for tomorrow. We have ABC pattern up after a very strong momentum push down. This is an excellent short set-up. At the same time, there is a strong tendency to go touch 1953.25 tomorrow.
I will not be surprised if NQ touches 53.25 tomorrow and I will not be surprised if NQ completes its ABC-up and then makes a low below todays low tomorrow. Stay flexible and take whatever it is that sets up.
http://bp2.blogger.com/_5h-SWVGx6Ms/...un+25+2007.bmp
comments on todays markets appreciated.