Bigger Picture in E-minis Discussion

All of what you've said makes sense. I'm not trying to predict the market but just think it through and figure out what I will be looking at if it does certain things. There are risks that I see to both sides of the argument. "Risk on" has the chance that a bank will collapse or more likely Greece will pull out of Europe and default. In spite of there being lots of money 'sloshing' about, I'd point out that the only thing worse than not making money is losing money. True, if inflation starts to pick up then in real terms this money will be less valuable. Perhaps that is the answer. Scare the money into action with inflation!

On the "Risk off" side of things, there's clearly the chance that when Europe says that they will do everything to keep the Euro together, they will actually be able to deliver. Plus there's the fact that commodities and bonds etc. have run up all this way already. But then if it's part of a much longer term trend, then the prices we currently see in commodities could be cheap. Gold at $1000 or oil at $50 seemed expensive not too long ago. Then there's what I believe about this move in stocks being mostly down to 1- speculation and 2- currency devaluation. So actually although we've moved up a great deal since early 2009, realistically I don't believe the move to be down to strengthening economic conditions. If the economy started to boom, the S&P 500 could top 2000 plus some imho.

Having said all this, my intention for the thread is to really talk more about the bigger near term technicals so as not to get too bogged down by intraday stuff and miss the really salient information. Looking at this, I see signs that the market 'wants' to correct to some extent. This desire could add fuel to the fire for the bulls, it could move the ES down 50 points from top to bottom or it could end up the start of a bigger correction.

But who really knows anyway. There will be some who are 'right' in what they are saying will happen but then is that because they really know? What I know is I don't have to be right to make money

It seems to me that over the last few days that a decent amount of supply has been removed from the market. It's not clear to me if more will enter or if we have found enough demand to take it to a higher high. I won't and don't bottom fish but I would look to take a long at about 1414 if the overnight 1398 low holds and other particulars are evident. If they are, I think we'll get at least mid 1400's before the close of the quarter. That will be a decent enough R:R for me to cast a line. If 1398 doesn't hold, I will most likely still want to enter long, but it will be from a lower price than 1414.

... In short: history has show 100% of the time, once a currency devalues and bottoms out for whatever reason (hyperinflation, political upheaval, etc)... there is a complete and full economic recovery from trough back up to peak within 6-24 months.

Thanks for your comments.

I take issue with the claim that this has been 100% effective remedy measure for policymakers. It certainly wasn't for Thailand and Mexico in the late 1990's. Studies suggest that the effectiveness of devaluation depends upon the market perception of the country devaluing. If it is perceived like Britain - it will be effective, like Mexico - probably not.

Thanks for your comments.

 

I take issue with the claim that this has been 100% effective remedy measure for policymakers. It certainly wasn't for Thailand and Mexico in the late 1990's. Studies suggest that the effectiveness of devaluation depends upon the market perception of the country devaluing. If it is perceived like Britain - it will be effective, like Mexico - probably not.

Actually, I may not have explained it well but here is a link to a well done academic study of some of the issues that are intertwined with the euro crisis.

According to this, mexico's GDP bottomed out 3 quarters after devaluation (page 44)

Thailands bottomed out 4 quarters after devaluation (again, page 44)

Scribd

Basically, Neg et all, I think you're really talking about a lack of volume while the markets climb up a wall of worry.

Check this article out for a very interesting study on S&P gains and losses during periods of low and high volume (relatively).

Why Volume Matters - The UnBearable Lightness Of Bear Market Rallies | ZeroHedge

Here's the chart I posted in the Day Trading the E-mini Futures thread:-

Basically, we can see that compared with the big balance profile from 2007 (in red), since early September we have been trading in the middle of the two volume peaks (1415.50 & 1479.00). Volume has built towards each peak but not quite there. This possibly shows indecision as to where 'value' lies currently. However, it's also important to note that we haven't yet actually tested the 1479.00's. The trend is still up. Buyers did come in when we retested the lower development (in the cyan profile). Although Friday did see selling, it was from a higher starting point. Too long can equal sell-off until buyers re-enter. We could of course get more selling over the next few days as well, but that isn't necessarily how I'm viewing it right now. I am thinking if we stay in the upper dev (hold above 43.75/45.25) we could extend to finally test the 1479.00 level before deciding whether value is to be established higher or not. Of course, anything can happen and a failure to move higher could well see us retest the 1415.50's too.

This looks like a BS move up. I suspect that it is moving up to about 1458 and will then move down significantly to below 1414, but it really all depends on what develops. The turn at 1416 lacked volume.

The actionable trade is to take shorts starting at 1457 to the recent high around 1466. To begin shorting, I need to see a shorter term change in direction. I will short with small stops and reenter short if I get taken out. I don't mean that I will start shorting at 1457 and stay short until 1466. If there isn't a directional change, then I won't short at all. If there is a directional change and then it changes direction again, i will stop shorting and wait for a break out of the developing range.

This looks like a BS move up. I suspect that it is moving up to about 1458 and will then move down significantly to below 1414, but it really all depends on what develops. The turn at 1416 lacked volume.

 

The actionable trade is to take shorts starting at 1457 to the recent high around 1466. To begin shorting, I need to see a shorter term change in direction. I will short with small stops and reenter short if I get taken out. I don't mean that I will start shorting at 1457 and stay short until 1466. If there isn't a directional change, then I won't short at all. If there is a directional change and then it changes direction again, i will stop shorting and wait for a break out of the developing range.

Why do you think it's BS? Just because it got there quickly doesn't mean it's BS imo. The move back lower so far is within the current uptrend and it looks to me like they've been trying to find a low. The fact that the Fed and ECB are committing to do "all it takes" to fix the problems and that this means one thing for the real value of those currencies, means we are likely to see higher and higher prices imho. Now that's not to say that we can't correct at all in the meantime, but right now it seems to me that we could see a retest of recent highs. Today could well be an important day to gauge the chances of this scenario as news/results could be supportive, so if they aren't...

Why do you think it's BS? Just because it got there quickly doesn't mean it's BS imo. The move back lower so far is within the current uptrend and it looks to me like they've been trying to find a low. The fact that the Fed and ECB are committing to do "all it takes" to fix the problems and that this means one thing for the real value of those currencies, means we are likely to see higher and higher prices imho. Now that's not to say that we can't correct at all in the meantime, but right now it seems to me that we could see a retest of recent highs. Today could well be an important day to gauge the chances of this scenario as news/results could be supportive, so if they aren't...

 

 

I may be completely wrong on my read. I won't go short if we do not get a directional change. It may very well continue higher to higher highs. The current direction is certainly up.

I wasn't suggesting that I would short 1458 by trying to pick a top and by no means was I calling a top. I just think that the low at 1416 didn't have the volume that would indicate that there was great support there. A decent move up usually comes off of decent support, indicating that supply has been removed; so, I think we might have to still go down. There are no free rides for the weak.

Low volume moves without the capitulative volume make me very suspicious of the strength of a move in the opposite direction.

I may be completely wrong on my read. I won't go short if we do not get a directional change. It may very well continue higher to higher highs. The current direction is certainly up.

 

I wasn't suggesting that I would short 1458 by trying to pick a top and by no means was I calling a top. I just think that the low at 1416 didn't have the volume that would indicate that there was great support there. A decent move up usually comes off of decent support, indicating that supply has been removed; so, I think we might have to still go down. There are no free rides for the weak.

 

Low volume moves without the capitulative volume make me very suspicious of the strength of a move in the opposite direction.

I'd make two general points. The first is that we have Q3 earnings and the US election upon us and given that we are near recent highs already, I think that big money isn't going to want to commit heavily just yet. Second is that although a bigger correction could take place to entice buyers back into the market and create an "unfair low", markets generally go from trend-balance-trend-balance. We could well move into, or expand upon current minor balance over the course of the next 3 weeks or so. We could also break higher and never look back, break higher and retest the poor lows, break the lows to expand the current balance or break the lows and get a further correction. There's still a great deal of uncertainty in Europe and news could change things at any point in time. My personal view currently and this is not a recommendation, is to look to fade the extremes of the current balance. It being a double dist only adds opportunity. This view could also change at any point.

I'd make two general points. The first is that we have Q3 earnings and the US election upon us and given that we are near recent highs already, I think that big money isn't going to want to commit heavily just yet. Second is that although a bigger correction could take place to entice buyers back into the market and create an "unfair low", markets generally go from trend-balance-trend-balance. We could well move into, or expand upon current minor balance over the course of the next 3 weeks or so. We could also break higher and never look back, break higher and retest the poor lows, break the lows to expand the current balance or break the lows and get a further correction. There's still a great deal of uncertainty in Europe and news could change things at any point in time. My personal view currently and this is not a recommendation, is to look to fade the extremes of the current balance. It being a double dist only adds opportunity. This view could also change at any point.

All valid points. The most important aspect is direction. Direction is currently up. For the timeframe I would trade ( 1-10 days), I will still call it up as long as it remains over 1436, given the 1452 high.

Volumewise, the turn at 1416 seemed to be a turn because there was a lack of sellers instead of an influx of buyers. We can say the same for the high at 1466, regarding a lack of buyers vs a preponderance of sellers which makes it also very likely that we may move upward until we find resistance, which we did not seem to find last time. When either of those events occur, I am suspicious that we will have to revisit the area to make certain that there is no longer supply or demand remaining. A move to 1416 from this where I would anticipate entering would give me an opportunity to make about 50 points. If I see the directional change, I'll give it a shot. I won't try to catch the knife and call a high. I also feel that we are least in the middle of the move up or maybe towards the end of it, in which case taking a long would be too short term for me to trade ES so I would rather wait or trade something else which will pay be for the risk I take.

I also feel that we are least in the middle of the move up or maybe towards the end of it, in which case taking a long would be too short term for me to trade ES so I would rather wait or trade something else which will pay be for the risk I take.

What tf do you look to trade ES on?

Sorry- 1-10 days.

All valid points. The most important aspect is direction. Direction is currently up. For the timeframe I would trade ( 1-10 days), I will still call it up as long as it remains over 1436, given the 1452 high.

 

Volumewise, the turn at 1416 seemed to be a turn because there was a lack of sellers instead of an influx of buyers. We can say the same for the high at 1466, regarding a lack of buyers vs a preponderance of sellers which makes it also very likely that we may move upward until we find resistance, which we did not seem to find last time. When either of those events occur, I am suspicious that we will have to revisit the area to make certain that there is no longer supply or demand remaining. A move to 1416 from this where I would anticipate entering would give me an opportunity to make about 50 points. If I see the directional change, I'll give it a shot. I won't try to catch the knife and call a high. I also feel that we are least in the middle of the move up or maybe towards the end of it, in which case taking a long would be too short term for me to trade ES so I would rather wait or trade something else which will pay be for the risk I take.

Are you looking for just 50 point or so moves or would you look at say median daily range x whatever?

Are you looking for just 50 point or so moves or would you look at say median daily range x whatever?

I want trades that are going to have decent potential for the risk I am willing to take. 50 to 100 point moves taking into consideration adds is about right. But, there is no way to know if what it will be or if it will be anything at all. Sometimes, I end up being the fool that others try to trap.

I suck at trading ES during the day timeframe so I do not do it unless there are very rare conditions like very high volatility, which really doesn't exist these days. I am patient, but I do not have the patience to trade ES during the day. I would rather trade other things or not trade at all.

Know thyself.

Looks like, at the moment (48 hours) this was a drift back up on low volume. If 58.25 is the high, I'll give this a shot at 42.25 with a stop entry. If we spend a lot of time between 50-58, I take it short higher.

Clearly the low volume up move, which has been the case since April 2009, can continue upwards to new highs so, in my case, I feel safer waiting for a confirmed directional change. With what has developed, I would rather miss some of the move than get pricked catching the knife.

I'll short 4375 with a stop entry.

The move up seems to have petered out as I was suspecting ( guessing ) it would. I feel it is worth the risk if it goes lower.

I'll short 4375 with a stop entry.

 

The move up seems to have petered out as I was suspecting ( guessing ) it would. I feel it is worth the risk if it goes lower.

Just so you know, 43.75 is the low volume price right in the middle of the current balance profile I have and also on my long-term profile.

I'll short 4375 with a stop entry.

 

The move up seems to have petered out as I was suspecting ( guessing ) it would. I feel it is worth the risk if it goes lower.

Trading is always much moire fun when things work out the way you hope. My entry took trivial heat. Any how I plan on holding over the weekend and adding if we get to certain levels below.

Just so you know, 43.75 is the low volume price right in the middle of the current balance profile I have and also on my long-term profile.

 

Thanks,I have a long term profile up. I don't act on the information

Glad it's working for you! Was just and FYI and in fairness that was an area (ish) where a little support was seen. The OD down with delta was pretty conclusive though. What are you looking at again? 1400 ish?

Glad it's working for you! Was just and FYI and in fairness that was an area (ish) where a little support was seen. The OD down with delta was pretty conclusive though. What are you looking at again? 1400 ish?

I saw it hesitate around there. I was preparing to curse you.

1400 would be really nice. I said 50 points before, but that is with 2 contracts to start so, call it 25 as the price flies. I suspect a decent move but will bail if I do not like what develops. So far I like it. I will also stay as long as I can if the development continues to favor the downside.

I'll add at 19.5. Very very doubtful it will get there by the close. I'll put it back in on Sunday night.

Some overnight rotations. I am out at 3675 if we go higher

Looking at the chart, although we sold off on friday, we did stay within the balance (low on 9/10 @ 1418.75). I've expanded it to illustrate the void down to around 1409.00 (low of 1403.75) from 9/6. The singles start below the 18.75. Although there are a couple of overlapping points, mostly the zone is thin. Above, I'd want to see a retest of 28.00, 31.25 or 33.75 hold (and reject) if I were holding a short imho.