Friday, October 14, 2016

Last Week

ES - After Monday’s meeting, price retreated to the 2115-2135 level to build support on the south slope of the 90 day composite POC.   It is clear from observing the drop off in participation above 2182 that price has little action to buy much higher.   Tuesday’s transition to this lower level was carried out by large lot traders, almost appearing as a panic and halted crisply in the vicinity of BREXIT, major trend lines, and Z16 contract lows.   Impressive…..  The gap low observed on Thursday was the return from the Yom Kippur holiday, a day that Jeff pointed out would be key.   Friday wrapped up the week.   There were several legitimate reversion trade entries last week.

The negative slope on the On Balance Volume indicator stands out.


Price action was similar to the ES but to different MP structural references - Retreating after a two week old newly formed barnacle island near 2.5% below all time highs back into the 90 day High Volume Area and executed a clean landing on the composite 90 day Point of Control.   

YESTERDAY'S Price Action:

To confirm the observations of the On Balanced Volume indicator, I'm checking the Commitment of Traders Report. It looks like Big Money (Smart Money) is continuing to leave the market...

Liquidating: Large Speculators, Asset Managers & Leveraged Funds
Buying: Small Speculators & Dealers

Liquidating Large Speculators & Commercial Speculators, Asset Managers and Dealers
Buying: Small Speculators & Leveraged Funds (!!!)

SUMMARY - If I were big money, not knowing what’s going to happen, I would be apt to simply stay in this region, filling in low volume areas, unloading supply onto retail investors, and make money simply moving inventory back and forth - Unless of course if something changes…