Monday, October 24, 2016

Barnacle Islands and Spackle Touchup....

With two weeks to go to the elections, we are definitely in hunker down mode yet we had a change in the market. Over the weekend, price made a very interesting leapfrog move. From the 90 day view it shows up and shows up better after zooming in....
Price Leapfrogging Into the Next Auction Area.

Interesting is how the ES is now riding a major trend line:
Today's price action

NQ left a gap this morning from 4645 - 4876
  • The NQ did a nice leapfrog
  • NQ had clear targets on ATH
  • Volume was 86% average (matching last friday)
  • That the NQ “parachuted overnite”  the and flew over the Gauntlet of MP spikes means to me, short time frame trader did this (i.e. perhaps the guy stuck buying all the large lot selling the last couple of weeks???   By marking up during the overnight, this trader has created instant wealth for his holdings.
  • In my opinion, this trader will attempt to liquidate all the inventory he bought the past two weeks, at this present level and at the same time, create a new barnacle island.   This barnacle island growing would be painfully slow but compatible with the ES doing spackle touch up work (see below)
  • Rationale to go short and close the gap does not appear tidy with the Gauntlet MP High volume prices in the way - The Leap frogger’s trading buddy…..  (dunno).
  • All of the above discussion, what I would do if I were big money, goes out the window of something happens.
  • Otherwise, we’ve two more weeks before elections with no idea where this boat is going….

ES left a gap this morning from 2135-2140
  • Today’s ES distribution was like a spike on volume 63% of daily average
  • I’m calling this a touch up spackle day
  • Rationale to go short  (close gap)
  • Rationale to stay put (fill in LVA 2142-2145
  • Rationale to go long (fill in LVA (2145-2152)

We have not been in this region since 10/11/2016.   Inspecting auctions in this range, there are many multidistribution days and days with multiple POCs.   Today’s range was ridiculously narrow...
A look back is necessary to observe prior trading in this area.

We have not been in this area since October 11 - A review of the composite MP finds jagged terrain.   Perhaps we are cursed for the next few days of filling in narrow LVAs?   Otherwise, there are plenty of MP targets to take reverses off of.

Summary: Last time we were in NQ white space, volume and action was very lethargic. Today, we also had LVA's filled in on the ES and there are several more LVA's in the area.

Unless something happens, I believe this will be the order of business awhile.