I just wanted to post up a pic of the past few days' profiles because it is very telling of what was coming, and I think it could be used in the future to see how the profiles form when coming into a downward move.
Notice how the profiles were forming continuous "b" shaped profiles. What this shape is indicative of is long liquidation. Why? Simple. The fact that there is no initiative selling tails at the bottom of the profiles is showing that no new selling is coming into the market, so the longs are just letting go of positions. You can notice there is a balanced area, "b" profile, balanced profile, and then another "b" shaped profile right before we had this major move down yesterday.
One other thing to notice...value continually positioned itself lower. Every day of last week value moved lower. Thats a big signal that we're heading lower and any longs should have a TIGHT stop, or look for initiating short positions on a longer term basis.
Today we've got a P shaped profile, showing short covering. There isn't any new buying that is showing in the profile of today. And while value placement is inside of yesterday's
value area, we must remember value for yesterday was larger than it's been in a long long time. Value has now been placed in the lower range of yesterday's value. I would expect to see some initiative selling once again in the coming days until we start seeing profiles that showing us new buying is coming into the picture.
