Sep 212012

The market continued to decline in range this week making it difficult for intraday traders. This is due in part to a thin report schedule for this last week.  This was an inside week and volume was about average. This suggests some form of indecision as the market churned in a 21 point range for the week. Typically this leads to some expanding range in the near future. The market maintains its uptrend toying with fairly long term highs going back into late 2007. Let's take a look at the cycle chart:

Weekly and Monthly Cycle Charts

Weekly and Monthly Cycle Charts

As you can see, the cycles are at a top. Failure to take out, or even test a new high this week is bearish in my opinion. If we do not test into new highs early in the week, I will be more a bear. Some expanding range is due and it should not take much to set it off. This suggests down as well if it manifests as described.

Below, I have posted the 22 day composite where we can see we are closing below the week's high volume node at about 1452.50.  This is bearish but, because it manifested in the late afternoon, it could simply have been short covering going into the weekend.  For this reason, I will want to see buying early in the week, or I will expect lower.

Nindicator Value Profile

Nindicator Value Profile

We can see there is very thin volume below the 1450 area, forming somewhat of what I like to call a volume "cliff." This is a region that will likely provide little resistance to downside movement down into the 1438 level or so.  We have a virgin point at 1430.50, but I will expect to see some sort of buying come in at the 1436 high volume node in order to get there first.

Yesterday's probe (Thursday's) below 1450 was indeed bearish and a retest at a minimum is likely.

This week I focused on trading mostly and I am working on a patent for some amazing new trading tools I am working on. Truly revolutionary!.  The programmers are finishing the installer for the Nindicator project in the coming week or so in order to make these incredible tools available to other traders after 10 months of working on it. Humorously,  other trading tool providers have basically come and gone essentially in the time we took to program the tools.

The report schedule next week is still fairly thin with the big report day being on Thursday. Next week we also have reports on Friday. This is usually a good thing as often traders have thin markets on Friday. Tuesday and Wednesday have a couple items on the schedule that could move things a bit. Monday is more or less blank.  As a result, if we do see some market action early on Monday it may be a bit more definitive as it will not be obscured by price action resulting from other reports.  This makes it easier to interpret price action early in the week that may tend to define the OFT (other time frame participants), actions and intentions.

That is about what I have for you- It is the first day of Fall today. I wish you a wonderful Fall and a wonderful Fall weekend!

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