[SunTrader]

Originally Posted by joshdance »

Regarding value...

There are several measures that people use to determine value over some period of time:


Can you think of any more, and which ones are important to you?

A no-brainer when looking at markets other than 24 hour variety the most important price is the Opening.

[joshdance]

Originally Posted by SunTrader »

A no-brainer when looking at markets other than 24 hour variety the most important price is the Opening.

Good one. I typically think of the closing price of the regular session as important, and then in the morning when the regular session begins I evaluate the opening price in relation to the prior close (high, and low, etc.). I suppose I did not really think of the opening price itself as a measure of value. But, it is marked on my chart at the 9:30am equities open so I do find it very important.

I would like to hear your thoughts on why you feel it is THE most important price (and if you consider it the most important measure of value); some examples of openings and how you view them would be a very valuable contribution to our discussion.

[SunTrader]

Originally Posted by joshdance »

...... I would like to hear your thoughts on why you feel it is THE most important price (and if you consider it the most important measure of value); some examples of openings and how you view them would be a very valuable contribution to our discussion.

The opening is most important in my mind because markets have time to account for overnight or over weekend news. The close can be manipulated more so just like end of month and end of quarter and end of year window dressing.

The open is put up or shut up.

And also using the open for end of day analysis of the close, I always compare the close to the open. In other words did the market close higher or lower than the open and not whether or not it closed higher or lower than yesterday's close.

Yesterday's close is far less important in relation to today's open or close.

[ckait]

I think personally the most important thing on a sunday night is the last open and the last close. That is the last beer you open and the last one you finish!!!! Cheers.

[joshdance]

Originally Posted by SunTrader »

The opening is most important in my mind because markets have time to account for overnight or over weekend news. The close can be manipulated more so just like end of month and end of quarter and end of year window dressing.

The open is put up or shut up.

And also using the open for end of day analysis of the close, I always compare the close to the open. In other words did the market close higher or lower than the open and not whether or not it closed higher or lower than yesterday's close.

I see your perspective. But in the global market we trade, don't you think that the open, as defined by the equities open at 9:30am ET, can be manipulated just as much as the close? I mean, how hard is it to push the indexes around at 9:00 or 9:15? Pretty easy for those with the desire to do so, IMO.

The only true "open" IMO is the Sunday globex open, when you consider that there's actually a significant trading halt of 48 hours. And even then, those who put in the orders can create the open to be wherever they want, as the matching algo of the open at the exchange will pretty much create the opening tick where the most volume will be traded.

So given that manipulation is easy to achieve, we must consider manipulation as something that exists, but not be concerned with "true value" or "real value" but rather just consider what is, IMO. The open is no less prone to being "altered" than anything else in my view. Would love to hear your view, whether agreement or dissenting. Thanks to all by the way for a lively discussion here!

[joshdance]

Actually ST, as I think about this a little more before heading off to bed, perhaps I might state it this way: as far as regular trading hours (9:30 - 4:00 or 4:15 for futures) goes, the opening price at 9:30am is significant only in its relation to the prior closing price (not the prior opening price). And the closing price at 4:00 (or 4:15 for futures) is only significant in relation to the morning's opening price (not the prior close).

This gives us a metric for determining how traders in the Asian and European markets saw value as we consider the open in relation to yesterday's close, and at the end of the US session, we can glean whether the US market saw value increase or decrease: a close higher or lower than the morning open.

This is kind of rough, and again, given the continuum of markets and varying of times of economic releases, it's not so exact, but perhaps this is a good working model for establishing value. Love to hear your thoughts.

[joshdance]

The overnight action in the ES is a good case relevant to this discussion.

We have basically selling, and more selling. You can see the delta (top pane of second picture) is very net short. And the profile (navy/purple) for the overnight session is very positively skewed (meaning the bulk of the volume is towards the bottom). And the gray profile picture shows the area of support at 1305 breached with volume starting to build below it.

The market will likely open around yesterday's low or lower, about 6 points below yesterday's close and yesterday's open.

What does this mean? Is value being established below the 1305 support? Will it punch back above? Or does this heavy concentration of activity in this 5 point range indicate that a move up is imminent?

Well, for me at this moment, 9:12am, I would not want to be long in this area. The general order flow and sentiment is clearly short, and I would not want to be fighting that. However, it can change in a heartbeat, and we must be alert for that. There is obviously no answer to "what happens next" but if we wait and see, monitor the sentiment of the market, we can have a good idea. But I think based on the fact that we are trading where we are, at the open we will find more sellers, and we must be ready to be with whoever is in control at the moment!

[roztom]

JOsh/: I certainly agree..

Yesterday 1.23.12 my upside number was ES 1317.50... when we failed off of there it set up 1302.50..hit in GBX and below, near-term 1298.75 CLVN and 1297.00 NVPOC Area as downside targets... I am going to favor short side but will go with the flow...

Good Trading,

Tom