Post Andrew Smith Dinner

A quiet week - The summer heat waves have finally subsided and thank goodness for the Andrew Smith dinner last night...

This is the 30th blog I've posted - Thanks for letting me do this as it has helped me tremendously bring order into the deluge of information I've taken in over the past year, where it became apparent that a QE bolstered market was a thing of the past and a better understanding was needed.

First, the usual run down, a trade review, and then some loose thoughts...

Big Picture - No Change.  The three equities are filling in marked areas and proceeding with intraday in-balance trading rules. For the while, even oil appears to be settling. As I've become more efficient in the daily routine, I will start rotating in different charts of interest.

VOLUME ACTION

• Large lot buyers appeared today, unable to bring the round bottom up above horizontal support
• With all the large lot selling at the lows of the past two weeks, I’m again surprised price did not collapse, meaning to me a skilled operator is driving the bus.
• In the spirit of “no change” I would think whoever is buying all this inventory will be needing to mark up price soon
• I'm thinking for better legibility, discarding the ADX and MACD panels on this view.

STRUCTURAL ACTION

- Throughout the day, multiday lookback MP features played a part during today's live action. Seeing this play out over a period of hours helps make the day make sense

- Today’s ES pit was very responsive to the globex action (this is a recent change). This evidence supports the need to pay attention to the global playing field

- The NQ continued to fill in the identified LVA (as called)

- The ES continued to fill in the identified HVA (as called)

- This continues to be a sign of Short Term Money in charge of the market.

- What it will take to break out of this area, I’m suspecting it’ll have to be big news or the elections. (although I do have a theory in my mind that with all of the algos trading upon observable reference points, we may be having a dynamic damping of what used to be human driven action)

YESTERDAY'S Price Action:

Interesting - LOTS of visual levels near today’s settle.  

After the morning test low, a single linear climb was observed all day

On Balance Volume indicates buying (for a change)

Afternoon Trend - Long, yet unable to gain high acceptance (for now)

Cash out:  Mixed….  ES Short Cover, NQ Liquidation

PRIOR DAY TRADE REVIEW:

0841 Premarket Position - Volume Wave Trigger.

0900 Premarket Position - Volume Wave Trigger

At first glance, both of the above entries would've required a bot to detect.

1027 RTM(20) - Somewhat risky as this was heading back into the open yet demonstrated a normal day distribution taking place over the entire day (and not just during the initial balance period)

1340 Retest and GapFill (flinched on a couple false entries wiped out morning profits)  Observe how price didn’t cleanly bounce off SMA 200, rather, the prior day POC. I would call this a blown play that scored anyway.

Price action Trade Review.   At the end of the day, several were able to trade off the HVA edge.

False entries during the mid day rally - Sloppy alignments and trying to go long on the after lunch breakout wiped out morning profits, yet netted positive for the day.

END OF DAY CARRYOVER SUMMARY:   

• Afternoon trend was long suggesting long carry over
• If I were big money, next Monday, I'd have to decide if Im going to the level above or stay in the present level
• If I were the big money that bought all the large lot sales over the past two weeks, I am getting in need of marking price up for a profitable distribution.
• If I am big money that's been selling at these levels, I would not wish for price to go lower in order to sell at the best price I can.
• By Next Tuesday, a review of progress on the entire contract to see if a revisit lower is necessary
• If I am big money, I'm likely rotating my portfolio based on earnings reports as options expire today in a manner were even if the composite average does not move, my holdings will reflect earnings news and the upcoming elections.

Perhaps another week of musical chairs?

A New Tempo to Reckon?

Summary

Some interesting movements today.

On the big picture, today's story remained the same with NQ filling in the LVA and ES filling in  it’s HVA

Daily Chart showing NQ continuing to consolidate and the ES in a weak position below its SMA200.

Big Picture Action

MP View confirms...

MP Action - NQ filling in LVA

MP Action - ES filling in LVA

The NQ and ES are showing some range bounding - keep in mind for possible reversals or breakouts tomorrow...

MP Structure respecting visual references.   Watch for reversals and breakouts.

Volume Action.   

The Round Bottom did not materialize today, in fact, large lot sellers were continued liquidating today.   Price action made very little attempt to break above horizontal resistance.

Volume was higher than in prior days. If large lot interests are selling, who in the world keeps buying? Or as Casio would say, "this pig is floating...."

Two Weeks of 30-Minute Data

PRIOR DAY TRADE REVIEW:

I stayed up late the night before drinking scotch and watching the debates.   Did not see it this morning…

I don't typically do what-if trade reviews but in light of the seeming stagnate action, it seems appropriate for me to see if I'm missing something - Perhaps I am?

Post Day - Possible Entry Review.

Close to identical Trades between the two markets:

Time

08:06 Premarket Positioning (No visual trigger but possibly a great robot entry)

10:26 H&S Top

10:49 FT Resistance - Short / or POC reversal short

11:58 SMA All Aboard Cross Long

12:45 POC Reversal

13:56 FT Support Long

Summary: Despite the seemingly inactive day, there were textbook signals present.  This was encouraging.  I suspect with the large institutions that have recently reported higher trading profit with fewer traders and with price essentially going nowhere, the “tempo” of the market has to have changed.  

I have noticed that moves no long coincide with certain TPOs as they have in the past (i.e. the 1030 ProFunds Guggenheim return to open comes to mind as does the German and London Open).   Perhaps this is temporary since I’ve begun collecting notes.    

I’m also now suspecting the use of the On Balance Volume Indicator with these HFT’s that can repeatedly “sell (accumulate)”, mark up with little volume expended, and resell.  An interesting article in Bloomberg on broken indicators  (http://www.bloomberg.com/news/articles/2016-10-19/wall-street-sees-graveyard-of-broken-indicators-in-reform-s-wake)   brings this thought to mind.

END OF DAY CARRYOVER SUMMARY:   

Quit staying up late drinking scotch and watching presidential debates - With the possibilities of an evolving market shaping up, it’s time to pay close attention...

Thought 1 - Volume filtering is showing large lot selling, yet prices remain higher.   If I were big money, I wouldn't want prices to drop if I had to liquidate lots of inventory.   

Thought 2 - If I were big money getting stuck buying all this selling that somebody is cramming down our throats, I would like to mark up price so I can unload with a gain.

Thought 3 - We are in a purgatory where volume is simply being shuffled in a loop creating trading profits while the market goes nowhere.    

To Be Continued...

Final Presidential Debates Tonight - And Today, Nothing Happehend....

I called it - NQ today set about filling in LVA and ES fortifying the HVP south of the Composite POC. Inside todays actions, there were few trades...

This week were reports on how the financials are reporting higher trade profit with fewer workers, I believe the tempo of the market has changed...

MP Action - These next two charts show little other than slowing price action on lower volume with a possibility to continue filling in the LVA tomorrow.

ES filling in LVA

NQ Filling in LVA

MP Action respected visual MP artifacts supporting the claim that short term operators were in control today.

MP Action, NQ

MP Action ES

On the second consecutive day of even lower volume, price action adhered very well to recent visual indicators - Again, a sign of  short timeframe traders.   

Prices responding to visual chart levels - A sign of short term operators...

Volume Action - Volume was around half of daily average.  By all intents, supply has dried up at this range?

The large lot filters show two different stories, selling in the NQ and buying in the ES while the retail traders in both took price higher. A two week round bottom is taking shape suggesting a climb higher perhaps.

IF NQ breaks 4850, then 4850-4900

IF NQ rejects 4860, then 4775-4850

IF ES breaks 2145, then 2140-2170

IF ES rejects 2145, then 2100-2145

Unless something "drastic" happens….

Reason to stay here.  If I were Big NQ Money, I would stay the course filling in where I am at structurally filling in the LVA and the same if I were Big ES money. However, with volume so low, this to means activity here has dried up and a move is in order.

Reason to go long.  Zooming out to the 12 day view, there is slight evidence of a slow bottom being put in.   The ES large lot traders were buying today.  The NQ large lot buyers were not present today but price climbed due to the small lot traders.

If I were buying all of last weeks inventory in the NQ, I would want the price to go higher before liquidating.

Likewise in the ES that has endured lots of selling the past two weeks.   If I were buying all of the inventory, I too would want price to go higher so I could liquidate.

Reasons to go short:  The OBV continues to show liquidation.  Perhaps this is an indicator that is broken?  If continued selling remains the norm, a liquidation would have to be the result - a fundamental correction.

To be continued...

During This Week's Monday Meeting....

Monday’s Action:

See prior analyses  - I called it…..

NQ in Balance

After last weeks effort to converge, today, we sat there in balance with volume between 17-20% below average and less than Friday’s volume - We were in balance.   

ES in Balance

Today is Monday and Big Money was in meetings wondering what to do next while price filled in MP anomalies from two days back (Thursday) leaving a relatively clean day today - Time to move on from here?

Price Action

Price action continues to follow OBV lower.   However, the ES is finding support off off a major trend line.   Observe the numerous settlement prices within close vicinity

For both the ES & the NQ, the trend toward the end of the day was a pathetic long - Suggesting going long at the opening.

NQ Price Action in Balance

ES Price Action In Balance

VOLUME ACTION

Examining the 30 minute charts with the large lot volume filtering:

The NQ had heavy large lot selling (yellow) in the morning and afternoon with a brief large lot buying TPO at 11:30 and beginning at 14:00

If I were large NQ money buying the morning, I would have taken the 11:30 opportunity as a markup to liquidate in the afternoon.   Heck, I might have even been the person selling in the morning.   The marking up beginning at 14:00 might be in preparation for another liquidation in this area soon?   The net difference in the NQ between buyers and sellers (72941 vs 73320) is barely 400 contracts (0.5%) - A balanced day

If I were large ES money buying in the morning, and unable to lift price above the SMA 200 (yellow snake), I would’ve decided going long was not an option and sold out during the afternoon.   This would agree with the notion (see below) that the likely path of least resistance may be going short. The net difference in the ES between buyers and sellers (517068 vs. 522059) is barely 1%. - A balanced day.

For both the ES & the NQ, the trend toward the end of the day was long - Suggesting going long at the opening.

NQ & ES Volume Action

END OF DAY CARRYOVER SUMMARY:   

If I were big ES Money:

1) I’d like to stay where I’m at building support in the 2115-2135 Basecamp

2) I may have to pack up and move high a) because I’m finding major trendline support and b), I’m far from SMA 200

3) I may have to had lower because a) the path of least resistance is lower & b) the OBV is telling me to sell.  If price crashes (unlikely with the fed control) I’ve marked entry points where slow-mo entries are likely.

Regardless, I have a feel for the terrain.

If I were big NQ Money:

I like it where I’m at…

If anything, I may visit the MP and fill in adjacent low areas above and below.   Also, I can’t keep ignoring the OBV selloff forever.  Tis earnings season…   We’ll see...

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.

NQ

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

http://www.barchart.com/futures/cot.php#1

Liquidating Large Speculators & Commercial Speculators, Asset Managers and Dealers

Buying: Small Speculators & Leveraged Funds (!!!)

http://www.barchart.com/futures/cot.php#1

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…

Rebalancing or Pausing?

Summary - Yesterday, the market made a large liquidation move lower. Today, while the liquidation continued, price was able to hold at value...

Top View Look

Bearish signals are apparent inspecting the negative slope of the On Balance Volume trend

After yesterday’s liquidation the NQ price has clearly been accepted into it’s 90 Day HVA/POC while the ES has slipped below its SMA200 where it building additional support would seem reasonable. Lower volume today suggests balancing (high volume would suggest panic, right?)

One interesting observation is that if we hang here long enough, we may have a chance to hit a major trend line and get to see what happens.

ES Liquidation Pausing on lower volume beneath SMA 200 - Either balancing or catching breath....

NQ at 90 day POC.

Market Profile View:

Summary - Tuesday's price was respected Monday's lows and the Globex levels for highs.

The NQ has trended lower for two consecutive days.   Wednesday’s Low of Day matched that from yesterday coinciding with a noticeable LVP in the composite. Wednesday’s price attempted to go higher upon release of the FOMC minutes but did not get past globex high nor the anomaly from yesterday.

If the NQ breaks lower, targets include the LVA south of the composite twin peaks.  If the high volume price at 4772 fails to hold lower, the MP & Pivots will be examined for further liquidation points.   Otherwise, the NQ appears to find the 90 day POC as support.

NQ support at 90 Day POC.   Possible LVA targets below.

The ES MP shows price did not match yesterday’s low.  As mentioned before, yesterday’s low is important because that level goes back the BREXIT time period and any lower would require pulling out older MP charts for reference.  

However, that might be what the market is needing to do (revisit BREXIT levels) that weren’t fully addressed during Z16 rollover? Because of the negative OBV trend line, continue to watch for lower target levels.

ES Did not exhibit panic liquidation today.  Watch for retesting for further liquidation & expecting LVA filling.

VOLUME:

ES DAILY VOLUME: 88% of average and less than yesterday

NQ DAILY VOLUME: 112% of average and less than yesterday

The ES shows fewer large lot traders throughout the day than yesterday.  This view also shows two ideal SMA bounce entries.  We can see the abundance of residual sell orders resulting from yesterday's action appear in the morning session.   However, the HVA at 2127 did a very good job.   The mid day rally campaign coincided with the release of the FOMC minutes.  In the the afternoon, liquidation occurred (again, stopping at the LOD) (WATCH FOR SELLING IN TOMORROW'S OPENING).

ES with Large Trader Filtering showing support at 2127 and slight selling tail at 14:30

The large lot traders were very apparent supporting price at the morning's low of day when residual sell orders opened the day.   Despite bringing price up midday, the afternoon was spent liquidating.  (LOOK FOR SHORTS IN THE MORNING OPENING TOMORROW)

VOLUME Continued - Despite today's settlement price being relatively close to yesterday's settle, the OBV shows lots of liquidation took place today.

Liquidation Day - Especially at cash closeout

Other - Pivot points appeared relevant for the High of Day.  All other pivot points too far out of range. Short time frame traders were in control today with respect for visual support/resistance levels.   Today’s flow was very choppy (is this indicative of being in a “fresh trading range”?)   

If I Were Big Money:

The negative trend on the OBV says continue a controlled liquidation holding value up as high as possible. Unfortunately, that would mean the retail traders and dealers are holding.

If I were big money, and couldn't maintain a balance here, a retreat back to contract lows come to mind. Perhaps a revisit to the contract low is in the future anyway?

Otherwise, if I were Big Money, I would also continue to try to hold a balance at these levels through the elections because those could be my orders....

If I were Big Money, I made my major move yesterday, continue my liquidation at these levels today, and will let the short time frame traders work it around here awhile -- Unless something happens.