Bigger Picture in E-minis Discussion

[cma6 10]

Negotiator,

Thanks for the valuable information. I will try to stay on topic and post in the threads closest to my question.

CMA

[The Abyss 10]

Negotiator,

Just thought i would lend some of my thoughts for the week or 2 ahead and maybe you can point out some areas where you agree or not.

Im a fan of keeping in mind of the markets balances and either failed attempts out or signs of breaks from them. I also believe if one side of a balance(regardless of a anytime frame) is tested outside of and retreats/fails then the possibility of the otherside being breached is high.

 

Im new to these forums so i hope my attachment below is viewable.

 

The point i would like to make is that it seems that the 6 previous days before Friday now look like a failed attempt above the mid-April balance area (i have it from 1360.75 to 1388.75). The 1st sign of this failed attempt shouldve been the excess left above on 5/1. Regardless of the emp # on Friday, once it settled back in the April balance and we gapped open lower on Friday the bottom of that April balance was foreseeable.

 

For this upcoming week, if it opens in Friday's range, i will be watching to see if it can hold or build value below Friday's lower distributaion area high, 1369ish. If so, then i would not be suprised if the excess below the 1360.75 balance low is retested and possibly even the 1351.75 gap.

 

If value 1st builds above that lower distrubution area from friday then the gap above at 1381.25 should be tested.

 

Again, just thoughts on what my 1st references will be for the upcoming week. Sorry so long.

SP - 5.4.12.docx

[TheNegotiator 13]

Negotiator,

Just thought i would lend some of my thoughts for the week or 2 ahead and maybe you can point out some areas where you agree or not.

Im a fan of keeping in mind of the markets balances and either failed attempts out or signs of breaks from them. I also believe if one side of a balance(regardless of a anytime frame) is tested outside of and retreats/fails then the possibility of the otherside being breached is high.

 

Im new to these forums so i hope my attachment below is viewable.

 

The point i would like to make is that it seems that the 6 previous days before Friday now look like a failed attempt above the mid-April balance area (i have it from 1360.75 to 1388.75). The 1st sign of this failed attempt shouldve been the excess left above on 5/1. Regardless of the emp # on Friday, once it settled back in the April balance and we gapped open lower on Friday the bottom of that April balance was foreseeable.

 

For this upcoming week, if it opens in Friday's range, i will be watching to see if it can hold or build value below Friday's lower distributaion area high, 1369ish. If so, then i would not be suprised if the excess below the 1360.75 balance low is retested and possibly even the 1351.75 gap.

 

If value 1st builds above that lower distrubution area from friday then the gap above at 1381.25 should be tested.

 

Again, just thoughts on what my 1st references will be for the upcoming week. Sorry so long.

 

1) If possible, it's better if you can attach the image an image filetype for posting

 

2) Is that CQG? Please tell me you don't have CQG IC? Unless you have specific uses for it I would highly recommend taking a look at linnsoft IRT or Market Delta or Sierrachart. Not that I think CQG is bad but it is very pricey and I personally find the others better for what I use them for. If you need more info, pm me or just message here. Either way is good.

 

3)Broadly I have the same areas although I tend to include the excess within the balance. I know why you are doing it like this though.

 

4)I prefer session gaps rather than range gaps normally. I am always aware of the range gap though especially when the close is not near by. I do count the open of 54.25 down to 51.75 on 3/8 as partially closed though so gap for me is 51.75- 47.50. In this case it probably doesn't matter too much though.

 

5)Yes building above the main Fri dist is useful, although often after a big move day you get a balance day. So I wouldn't necessarily pin too much on it initially. Whilst there are technical aspects at play to the move lower, news is being thrown into the mix now. European news could come out overnight and just wipeout whatever has happened over the last few days. We'll just have to see :missy:

Edited May 7, 2012 by TheNegotiator

[The Abyss 10]

Neg,

Yea thats CQG all right. It may be pricey but ive found its the best all around platform. Its the fastest & most relaibe ive come across. Plus being an old Nymex floor trader, i trade many energy markets..spreads..outrights..etc.. Its just been the most convienant. If the few hundred dollars it costs me are ruining my P&L than i have bigger problems than a pricey platform.

[TheNegotiator 13]

Neg,

Yea thats CQG all right. It may be pricey but ive found its the best all around platform. Its the fastest & most relaibe ive come across. Plus being an old Nymex floor trader, i trade many energy markets..spreads..outrights..etc.. Its just been the most convienant. If the few hundred dollars it costs me are ruining my P&L than i have bigger problems than a pricey platform.

 

I run Linnsoft IRT as do others on the E-mini thread. But it's exactly the same software as Market Delta just with a little less functionality. IRT doesn't currently support CQG data, but Market Delta does. MD also offer a 1 month free trial. So you could take the trial and use your CQG data. Just a thought for you to consider. Personally I really like IRT/MD (and am warming to Sierra), so imho it's well worth you taking a look. Setting the charts up is easy too as you can "share" chart definitions to import then alter as you please. We have an IRT forum here too if you want to ask questions etc.

[TheNegotiator 13]

Market delta trial form .

[The Abyss 10]

Thanks.. ill look into it.

[clmacdougall 11]

Thanks.. ill look into it.

 

Sorry to hear you're not feeling good.:haha:

[TheNegotiator 13]

Here's a quick look at the bigger picture balances and what they could be saying:-

 

[TheNegotiator 13]

Here's an update for the last chart:-

 

 

What's the salient information offered by the chart? Ask yourself what we're doing and how convincing is the current action. My view is that after sequentially higher yet wider balances, ES stopped its up trend in price, balanced more fully for a while and then broke balance to the down side. Over the last few days, this movement has accelerated and more volume has entered into the market. We haven't yet failed a test of what I consider possible important support levels. Imho, as we are moving lower we are bringing in more volume and more selling. Each day is closing near to its low. So, what am I saying? I'm saying that I think more likely than not, we have to move to test lower levels and the 2012 RTH open and low previously mentioned is something of a possible target. Although we are moving lower, due to the rapid change in prices, it's not unlikely at some point to see an aggressive test higher, so that is certainly something to be wary of. Remember, prices rarely move in a straight line from A to B. However, we are well within reach of the 2012 open & low for the week so that is something to look out for as a possibility. Watch out for any strong rejection of lower prices and a move quickly back higher. This will tell you whether things might have changed.

[TheNegotiator 13]

I actually did this chart yesterday but didn't get around to posting it. I wanted to share with you why I have changed my start date for my long-term profile. First of all, I'd like to point out that the current move up from the 2009 lows is the move that I am most interested in anyway. The edges are never ideal in that as they extend, there's no volume reference. So when I changed the chart to start from 3/14/7, it wasn't something I really wanted to do as such but more a neccessity. The reason I am changing back now is that we have (as of pre-open yesterday) spent two days below the most important nearby price at 1304.75. The most recent volume is more than sufficient to paint an accurate picture of trading activity and moreover, the most recent volume is more relavent. However, what I'm quite interested in is the high volume prices. The VPOC for the entire move up is still 1040.75. It clearly "liked" 1146.00 on the way up, but the nearest extremely high volume price is 1304.75. 1304.75 was the VPOC when starting the profile 3/14/7 and is clearly an important price for the market. The current difference in volume on the 3/6/9 chart is ~182k. IF the VPOC changes, we will have questions to ask. Is the market facilitating trade here in preparation for another leg higher? Is the market coming under increasing resistance to the current long-term uptrend and about to break much lower in a test of prior long-term value? Either way, I am thinking if a shift occurs it could change perceptions.

 

[zdo 20]

... just skimmed some of the material in this thread coming in to post and there's a lot of quality thinking...

... wish I could think at all

... and not sure this is on topic ... maybe diff kind of Bigger Picture

Chart Of The Year: The Fed Has Doubled The S&P Admits... The Fed | ZeroHedge

[karoshiman 10]

... just skimmed some of the material in this thread coming in to post and there's a lot of quality thinking...

... wish I could think at all

... and not sure this is on topic ... maybe diff kind of Bigger Picture

Chart Of The Year: The Fed Has Doubled The S&P Admits... The Fed | ZeroHedge

 

 

Good time to start thinking about shorting 24h prior to FOMC announcements, I guess... ;-)

[TheNegotiator 13]

Yes, it always boils down to easy money doesn't it!

 

Anyway, a few thoughts currently. Major Consolidation (MC) 1 from 2011 was broken out of at the turn of the year and a fairly tight uptrend began and moved higher until we formed a significant lower Minor Balance (MB) in the what was to become MC2. A significant lower high was put in and we trended down. Pretty much the RTH 2012 open at 1261.25 marked the low 1258.75. What I've drawn in as MC3 so far has been less than convincing directionally with MBs higher then lower then higher etc.. This is why I have it currently as MC3 rather than simply an uptrend - although clearly there is some sort of trend at the moment from that test of the 2012 open. It did also try to develop back within MC2 as evidenced by the upper 'small' development. A break back below the low volume area ~1340 to me is a potential sign that we're not accepting of old balance. We didn't test the MC2 vpoc and should we retest the current MC3 vpoc and show any acceptance (i.e. not a quick rejection and strong move up, rather some trading and subsequent development of the profile), that would indicate current 'value' is better than previous 'value'. The chances are we might then explore lower. Should this happen, we can test and remain in consolidation or we can sell off further and test old value- namely MC1 vpoc 1230.50. Again, we could go higher and end up testing MC2 vpoc at 1386.00.

 

Hope that makes some sense!

 

[TheNegotiator 13]

I forgot to say about the possibility of a long term vpoc shift to the now back-adjusted level of 1298.25. Certainly still on the cards if we get much lower.

[bakrob99 11]

Nice longer term chart. Shows that this pullback is quite probably just a good buying opportunity on the way to new highs. I don't see much "panic" in the markets these days compared to say, August 2011 or even 2007- 2008 when we had 80 - 100 point daily ranges. So the markets are just drifting higher.

[bakrob99 11]

8:13 EDT I am looking for continued downward movement to yesterdays settlement at 1329.25. Market may move a little lower if it gains momentum on this downswing. Currently 1331.50 which is high volume is providing support which could hold - but I suspect will fail once we get a few more traders long.

 

News at 0830 could change things. EC has gone from SD+2 to SD-2 so it has completed the full rotation and I am expecting the ES top follow.

[bakrob99 11]

I find Median Lines very helpful to quantify price action. Just one part of the toolkit but it kept me on the right side of the premarket this morning - and has the extra dvantage of telling you when and where to exit.

 

 

This median line is a "shifted" line that worked very well for me yesterday afternoon and has described price action perfectly today.

[MightyMouse 12]

Without the use of charts:

 

Interest rates are low.

Inflation is either high or low and it really doesn't matter since the fed is trying to spur inflation

Earnings are expected to be high.

 

We can expect money to continue to flow into stocks.

 

With a chart. Very minor pullback on the monthly chart.

 

In spite of the positive implications of the above, there is very small volume on the way up which means to me the masses have not started buying which means that there is no substantial overhead supply to be concerned with.

[TheNegotiator 13]

I think that given the way the fed are fiddling with the markets, medium-term analysis can a little difficult. I've been saying for a while now that the real value of the stock market is not good, but it continues to go up in $ value as Fed inflates and $ becomes less and less valuable (and stable).

[bakrob99 11]

I see that probable price action on the weekly chart suggests to me that we may go back up to test the recent highs at 1406 area

 

Strong buying came in at the support level and we popped strongly on Friday. This is typical OEX Week behaviour for the markets which often out in a low on the Thursday or Friday before OEX .

 

My weekly target is 1406

 

 

Obviously I am not basing a trade entry on this but will be looking for long setups and trying to stay in them longer than shorts assuming 1340 holds. The market needs to take out Friday's high today for me to think this will happen this week.

[TheNegotiator 13]

I see that probable price action on the weekly chart suggests to me that we may go back up to test the recent highs at 1406 area

 

Strong buying came in at the support level and we popped strongly on Friday. This is typical OEX Week behaviour for the markets which often out in a low on the Thursday or Friday before OEX .

 

My weekly target is 1406

 

 

Obviously I am not basing a trade entry on this but will be looking for long setups and trying to stay in them longer than shorts assuming 1340 holds. The market needs to take out Friday's high today for me to think this will happen this week.

 

Yeah I was looking at the 40's as pretty important support now, but would also say the 57's(/58.50's) is a potentially important resistance. Honestly, with all the news/earnings/QE uncertainty, there's certainly a chance of us moving either way. However, I think to move higher we do need to hold 40's and take out 57's within a day or two.

[TheNegotiator 13]

From e-mini thread:-

Thanks,

 

I was wondering why such a selling off. I have actually seen this in the past the day before big news (ie job numbers) where right at close price action drops hard. There are some smart people out there. Tommorow is important day IMO as far as which direction the market could go. I recall last ADP job numbers was better, but unemployment rate remained the same causing some mix price action direction that day. Either way, I will jump on board after the news and will not play the news.

 

As far QE3, over the last 6 months Ben says the same thing "we are prepared to force actions if needed" (something like that). I don't know what he will say, but IMO, I doubt there is any QE3 coming now. We see.

 

You know, over the past few days the market has been exhibiting a certain trait. That is it's moving up on nothing news. It's hanging on hope and possibilities. When markets do this, it's often a precursor for reversal. Can the Fed and the ECB flip a switch at will and make things better? Wouldn't they have done this already if they could have? So it's all about market confidence. Just as no confidence has an affect, so does over-confidence. However, I'd also point out that there's something rather artificial about markets at the moment (not just QE). So there's no guarantee any reversal will be any more than a correction. If something big doesn't change though in order to straighten out the markets, I feel there's a chance we'll need a blow out in order to naturally straighten things out.

[TheNegotiator 13]

'Interesting' summer trading we're into now. Seem to be floating up gradually. Tight balance near a range extreme often preceeds a breakout attempt. This is what we currently have. But who knows for sure as anything can happen.

 

[ForexTraderX 10]

From e-mini thread:-

 

 

You know, over the past few days the market has been exhibiting a certain trait. That is it's moving up on nothing news. It's hanging on hope and possibilities. When markets do this, it's often a precursor for reversal. Can the Fed and the ECB flip a switch at will and make things better? Wouldn't they have done this already if they could have? So it's all about market confidence. Just as no confidence has an affect, so does over-confidence. However, I'd also point out that there's something rather artificial about markets at the moment (not just QE). So there's no guarantee any reversal will be any more than a correction. If something big doesn't change though in order to straighten out the markets, I feel there's a chance we'll need a blow out in order to naturally straighten things out.

 

I'm not so sure Neg... I know this post is a bit old, and you may feel a bit different now, but when you say the market is moving up on nothing but hope and possibilties, I feel a bit different. I think MM nailed it pretty good a few posts before yours. Right now, I believe we may start to see the "flight to safety" trade unwind as negative sentiment is clearly waining. I'm not saying all is good, in fact, it seems china and to a lesser extent the economies most directly dependent on china will likely start to faulter a bit (AUD, maybe NZD, etc...)

 

but, over all, economic data coming out of the US and europe is improving, most noteably kicked off by the improved and surprising NFP a few weeks ago. Furthermore, the great bond bull run of the last 3 - 4 years I believe has run it's course... keep in mind, much of the capital that has "eased" it's way into the world economy over the past few years has been primarily absorbed in the bond markets and various other "safe" havens, thus fueling this rally even futher above and beyond what record low interest rates will do.

 

And I don't see many markets starting to post negative interest rates (though a few are)... but I don't see this going very widespread or very "deep" anytime soon, I believe we've about exhausted the "value" that could be obtained in such safe havens. As money starts to slowly trickle out of these havens, this will likely increase the "risk on " sentiment, and futher drive money back out of commodities, and in particular the U.S. dollar, and into reallocation into other asset classes, most obviously the world equity markets.

 

I dont' want to get too academic here, or bogged down in details, but in fact when currencies rapidly devalue (argentine peso, russian ruble post fall of the berlin wall, etc).... historically they have rebounded to SURPASS the economic conditions they were experiencing before any problems were recognized by the investment community, and they have done so in 6 months - 24 months in over 15 case studies since world war 2.

 

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.

 

It's actually quite astounding as I read a very well done reasearch report on this about 2 months ago.

 

So, in spite of the "impending doom"... i think the fundamentals of excess money flowing in the world, unsustainable trends in commodities and government bond markets, combined with some overall increase in fundamental reports out of the US and europe.... and considering the techncial "oversold" conditions of some of the risk currencies and other risk markets... I just think the value of "safety" is now become too expensive for what it is priced at, and this leaves primarily equities to be undervalued, and likely outperform significantly over the next 6 - 24 months.

 

Not to mention that many companies have been trading recently for below book value, and the nikki index over all is providing the greatest P:E ratios for value investment in the last 2 generations, and that is WITH the japanese yen being so expensive... should it start to drop, valueations would only look MORE attractive.

 

 

No, i'm going contrarian here, backed with some pretty strong underlying fundamental data behind it.

 

I fully acknowledge that none of it negates the problems that europe is facing... but they have been facing those problems now for a few years, and it has been known...not a surprise to anyone.

 

what IS the "new player" on the field is shifting improvement on the economic front in the regions that were first hit by the crisis, namely the U.S. and europe...

 

that, and a general market tone of many that "we are going to all go to financial hell and die now"... tells me that most everyone interested in selling risk, and buying safety, has done so.

 

i now think we will see a shift slowly emerging over the next few months as the general public notices that the "smart money" has been moving into risk assets...and we just may see for the first time since this mess started,j a sustainable if incremental improvement in economic conditions, and risk markets.

 

just my 2 cents...