'Markets In Profile': Detailed Book Review

[Frank]

hi winnie,

btw, in profile -- for whatever reason, the first 30-minutes is 'B period' (not A). also, there is no 'o-period' -- it goes straight from N to P. I can guess why but it doesn't really matter, I am just following 'their' etiquette.


ok, to fine-tune the entry, I use either a support level from past days or an oscillator pattern or an oscillator divergence. a little tape reading adds to the context.

today, I was looking to go long. but the 'fat' part of fridays profile was 1390.75 -- you can see this by watching the volume at price every day and recording the highest volume price. there was significant contract volume at 90.75 on Friday and we were under that today --- so this was a resistance level. it would be tough to go long too close to that level as that was your profit objective (buy below value, sell at/near value) so you wanted to wait for price to push down and then go long.

we pushed up right off the open and into 89.00 and reversed. As we pushed down, volume was weak --- which weakens the short-side argument and adds positive context to your original long-side gameplan.

just after 10:30am, a momentum-price divergence developed. price made a lower low while the 3/10 oscillator made a higher low. this is a well-known technical signal you should study. a divergence like this is a very short-term thing but you are just looking for a decent price to go long -- your real play is the market profile structure that you have analyzed.

the divergence occured and price tested up and then back down just as 'D-period' ended. Your expectation is that the low in D would hold. It traded down very slightly below this during the first minute of E. This is the kind of movement you just have to ride out. E is still a decent 'reversal zone' -- and it only violated the D-low for a brief moment in time. Sometimes, the market will continue to move against you there and you will have to figure a way out of your position. In this case, that low was the low for the day and price marched up until N-period, consistent with the structural bullish higher-timeframe bias.

note that the market ended up testing the previous days high volume price at ~1390.75 and finding resistance late in the day.

btw, I used a 800tick 24-hr chart here. I am watching the futures across many timeframes and usually time a divergence using either the 400-tick, 800-tick or 1600-tick charts. this part of trading, the very short-term nuances of entries, are very much a 'feel' thing.

[winnie]

Dear Frank,
Thank you for your detail explanation .

[winnie]

Dear Frank,
Do you have any idea in today 's market. Yesterday, I have strong feel that it will make new low first and high in afternoon. However today , I really don't have any idea. Just want to know how you think ?
Thanks

[Frank]

hi winnie, we had 'auction reversal' this morning.. I am expecting this to trend down until after 3pm...

here is a trick, yesterday we made high last and today we opened below yesterdays open. this is an auction-reversal signal (combination of a high close and open below previous opening price). this is a 'shock' gap and adds fuel to the fire as trapped longs have to sell when market breaks lower.

The first day of auction-reversal should be the most dynamic day. I have big short on... hoping for the best. we'll see.

[Frank]

note that the S&Ps made a low 3 mins before 3pm, this fits the 'L-P' model -- though it is more common for S&Ps to make a low after 3pm, 3 mins is close enough to call it 'afternoon low.' also, the profile did not 'elongate' to the downside. looks like this was a 'long liquidation' (inventory adjustment that may have completed) and not a lot of new selling (ie, an elongated profile -- which would imply continuation).

The market would still be 'expected' to violate todays low tomorrow. But tomorrow might be a day to go long if/when that happens.

[winnie]

Hi Frank,

Thank you for sharing !
it is very clear and you are so smart !

[winnie]

Dear Frank,
According to your experience, could you trade everyday ? That mean everyday you could draw conclusion in the market ?

[Frank]

potential 'laggards are in' signal this morning.. selling tail in 'D period' on a penetration of previous day high. this occured into key 89.00 resistance.

could be 'excess high'

[winnie]

Dear Frank,
yes, the laggards are in signal this morning ! thank you. After today's close, the market seems to be "balanced". Do you mean we can buy low , sell high in this case ? Is there any trend now ?
Thank you Master !

[Frank]

Here is same material presented slightly differently.

Wednesday morning saw higher timeframe sellers come in Period-D. Remember that when you are above the previous days high, you should be looking for a potential B-E reversal. The market traded down on Wednesday and this selling spilled over into Thursday.

On Thursday, the market went below Wednesdays low in Period-D. The 60-min auction appeared to be down at the time. But below the previous days low and a reversal UP in periods B-E is a buy signal. Thus, you need to be on guard that the selling cycle that began on Wednesday (above Tuesdays high) could be over.

On Friday, you were in day 2 of a new value migration up. Below the high of Thursday is a long possibility if get a reversal UP in periods B-E. We did make a low in E and then proceeded to march up through previous days high.

Note that all 5 days this week made the intraday high or low in B-E and 4 of 5 didn't stop going that chosen direction until at least 'L-Period'. The market will tend to do this but don't expect it to happen every day like it did this week. Can expect generally 3+ of 5 days in a given to act like this...