[Bearbull]

JWhite
That is pretty good assessment of price/volume action, Get hold of Dbphoenix's e-book, there are very informative sections on this aspect.

[gassah]

Originally Posted by gassah »

Good looking bounce off the top of the lower range for the SP500 today. It appears the upper range is back in control for now.

Then again, perhaps not.

[zeon]

Originally Posted by DbPhoenix »

On a day like today, i.e., a trend day, it's easy to come up the wrong conclusions regarding volume since the smaller waves are pretty much irrelevant to the larger.

The key here is shorting resistance at 2005. After that, all you have to do is follow the line of least resistance by means of trend lines and swing points. Typically, price will move sideways during lunch on days like this, and it did so today. Since it rose above a prior swing point only once, at 1300 (ET), you needn't do anything more than just wait and watch your profits increase.

Hindsight is 20/20... if price had gone up all day, you prob'ly would've said 'the key here is buying support at 1990'. After all, price opened around support, the trend from yesterday was up. There's a very similar example in your blog. So why not do it today? After all, price traveled all the way to resistance next. You can even draw a demandline next to it.

[DbPhoenix]

Originally Posted by gassah »

Then again, perhaps not.

The key words were -- correctly -- "for now", which is an aspect of this that the pundit wannabees continue to miss. While they may pay lip service to the idea of taking it all "day by day", they are also compelled to "make calls" in order to demonstrate how much they know. Or, actually, don't know. And thus get it wrong yet again.

We are now back where we started at the "selling climax", and those who bought here and stopped thinking have now watched all their profits evaporate. Or at least ES and YM (NQ has given back only 75%). What will be interesting now is how they react.

[DbPhoenix]

Originally Posted by zeon »

Hindsight is 20/20... if price had gone up all day, you prob'ly would've said 'the key here is buying support at 1990'. After all, price opened around support, the trend from yesterday was up. There's a very similar example in your blog. So why not do it today? After all, price traveled all the way to resistance next. You can even draw a demandline next to it.

No reason not to buy the midpoint at 1990, if that's a part of one's strategy. However, doing so would not be "key" to playing the trend day, and the trend day provided the sideways midday movement that I referred to and that I've noted several times in previous posts on the subject.

Or one could stubborly hold to a bullish bias, ignore the test of resistance, and stand by while watching most or all of his long profits evaporate. But that's the difference between trading reality rather than dreams.

An update to the ES chart I posted last week:

[zeon]

Originally Posted by DbPhoenix »

Or one could stubborly hold to a bullish bias, ignore the test of resistance, and stand by while watching most or all of his long profits evaporate. But that's the difference between trading reality rather than dreams.

The same could be said of yesterday. There was a 'test' at 1990, high volume and the initial reaction pushed price lower, just like today. The difference is that price continued higher while today it reversed. So one should have reversed longs too yesterday than?

[DbPhoenix]

Originally Posted by zeon »

The same could be said of yesterday. There was a 'test' at 1990, high volume and the initial reaction pushed price lower, just like today. The difference is that price continued higher while today it reversed. So one should have reversed longs too yesterday than?

No, one should have traded what was in front of him, buying a test of support at or around 1015 (in the case of the NQ), waiting through the midday sideways movement, then following the trend upward until the close.

[zeon]

Originally Posted by DbPhoenix »

No, one should have traded what was in front of him, buying a test of support at or around 1015 (in the case of the NQ), waiting through the midday sideways movement, then following the trend upward until the close.

You're being somewhat selective. About yesterday, you're assuming one is long when price hits 1990, so he stays in or takes some off his position off instead of shorting. While today you are assuming that shorting 2005 is 'the key trade', because the trader is still flat.

If you look at it from another pov, you could easily say short 1990 yesterday (high volume) and go long on support 1990 today, expecting a continuation of the uptrend. Your reply is going to be that there's no reason to short yesterday as the demandline wasn't broken which is correct, but neither was it today if you draw one from 1990 up to 2005. I'm sorry, but it seems like the decision to take the trade or not, depends on something else which you forgot to tell us perhaps.

Also, there was no way knowing today was going to be a trend day. You said it yourself, after a trend day (like yesterday) we usually have a consolidation day. So was there a reason not to go long off support today? And if a trader was long, should he not have patience and perhaps take off some of his position at the next resistance (2005), but leave some open. You've given plenty of examples yourself. So, following the approach you illustrated, one would exit part at 2005, wait for the demandline to break to exit some more and exit the rest at break-even. Not a whole lot of profit and he misses out on the big move.