ER2 Analysis 01/29/07

[TinGull]

Let’s look at what happened on Friday. We sold off right through VAL on ER2 and hit that pivotal support level around 781. That was our low for the day. We continued to auction higher and higher throughout the remainder of the day, but failed to do a “value cruise� to the VAH of Thursday. Is that a lack of buying momentum? Seems it to me. The ER usually cruises through value areas without much problem. So…that was a little red flag to me.

We made a lower value placement on Friday, as well, and sellers did outnumber buyers on the TPO count by 238/183. One interesting thing to note is that our TPO counts on 1/19 and 1/23 when we were at these levels before signaled buyers were controlling the markets down there. The TPO counts were 160/156 (pretty much even) and then 119/221 before we auctioned higher the subsequent days to get to the 800 level.



As you can see, we’re in a serious range. Any break below 770 or above 810 is gonna be a major signal.

Also…our monthly volume profile is also showing these levels as the monthly VAH and VAL. While we’re up at 790ish right now, I’d be watching out coming into 794 (monthly POC and high volume node) and the 797-800 area. This range we have been trading in is getting tighter and tighter. I feel like soon we are going to see a breakout.



So, my trading levels for tomorrow are as follows:

Looking for shorting opportunities above 800. Watch for chop around 794. Don’t get caught up in potential whipsaw action at this high volume node.

If we open above 790, watch for a long opportunity there (VAH from Friday) but be very cautious coming into that 794 area. Might be good to take a point or 2 and get out unless there is clear direction through that area.
If we open inside of value, looking to short around 790 area. Our value area consists of VAH at 789, POC at 786.2 and VAL at 784.00. 6 points of value is something the ER could clear no problem on a “value cruise�. IF we happen to open up outside of VAH and come back into value, this is a good play to watch. We could drop at least to 786, offering a nice profit of around 3.5 points.