May 252012

The first couple days of this last week were in line with my prediction. We did get some punishment as I referred to it after Monday and then sold off pretty aggressively. We then went into a ranging market for the rest of the week. In fact, we have formed quite a high volume area at or about the current closing price for the week resulting from the clustering. Let's take a look:

Nindicator Value Profiles

Nindicator Value Profiles

As you can see we have somewhat of a B shape, which would be "bi-modal" or you could say trimodal, but the third one is more narrow. B shapes are associated with continuation and so, unless we are able to get through the 1323 area with some strength, we are still in a bear mode; at least for the bigger picture.  The next high volume node is around the 1337.75 area. We will have to get through that too, but first things first; 1323. We took a stab at that going up towards the 1330 level in the night session last night, but that was rejected and short lived. This further suggests the bears are in control.

We can also see a virgin point at just below the 1330 zone. So, if we do manage to make it through our first goal towards bullishness, that will be a likely stopping point or consolidation area.  You can see in the daily profile to the left we have a clustering of two D's; one inside the other. This is typically associated with a strong breakout mode, so we will look for some response to this cluster inside the cluster inside the cluster situation.

In the much bigger picture ie. one year profile (not shown, I am seeing we are at or about a high volume node / point of control and are likely bounded by 1326.50 or so on the upside. and 1274 on the downside. But, the area beneath this starting at around 1287 will be fairly light in resisting further downward movement.  The same stands for 1326. Above this freedom of movement is fairly unrestrained going higher.  If you followed all that, then you can now understand my cluster inside cluster reference.

All that is analysis from the outside in, of course. Let's take a look from the inside out (a trend perspective):

Monthly and Weekly Trend Charts

Monthly and Weekly Trend Charts

We can see that our weekly range has continued to expand a bit, consistent with my "May is volatile" prediction. With average weekly ranges in the near 47 point range.  You will note this week we rose on average volume, but it was less than last week. This indicates bear control still. Add that to the clustering concept and it gives you an idea. The monthly will make any changes next week, so not a lot to talk about there.  The Oscillators on the weekly all continued lower; Nindicator Stochastic, Momentum and MACD, all in agreement.

This week, I have been consumed in the Nindicator project. This week I added about another 80 or so pages of trading examples to the manual. I developed the final logic for the Nindicator Box (which you are going to absolutely love, by the way), began a Nindicator YouTube Channel in addition to the webinar with Optimus Futures (I hope you didn't miss it) and other normal activities.

By the way, I urge you to go sign up to follow the Nindicator Channel. The reason I created this channel was to do something I already do every morning. Review the overnight action and analyze the value picture to get a handle on what the market is doing (or is likely to do). This of course, goes hand in hand with the Value Area Reports on this blog, which come out the night before. I will also post other content there, like trading examples or videos covering trading topics.  Most of the examples for the manual however, I am finding work best in writing as many of the concepts require subtle analysis of graphics that may be difficult to show properly in a short video.

By the way, the Daily Targets I put out on the site were hit 4/5 days this week for an 80% hit rate.  This, of course is as designed. I have mentioned in other posts about the joy's of watching your research predict as planned. The day that missed (and the why's and where's associated with missing) is covered in the Nindicator Manual in depth. This can lead to a 100% hit rate as your skill increases. The Daily Target tool is part of the Nindicator Total Package. A number of people have already asked if they can have the code for this tool, but in my opinion, it alone is worth as much as the entire cost of the Nindicator toolset, so why not get the whole enchilada if you are thinking about it.

Well, it is a long holiday weekend here and I am glad for it. I am numb in my head from all the work this week and am looking forward to a long weekend away from my computer.  The (futures) market will trade into Monday for a couple hours, but the broad market is closed.

I have advised for a number of weeks trading in the shorter term using tools like the Trading Plan that is found in the Value Area Report and the Daily Targets. When the Nindicator tools become available in the very near future, you will see how it all integrates into a comprehensive market analysis and trading system. Many of these tools are well beyond anything you have ever seen in an "indicator" before. It is the culmination of my life's work as a trader.

If you are new to the blog, Nindicators are a traders tool kit that works in the NinjaTrader trading environment. Ninjatrader is a highly versatile trading platform that can use the very best unfiltered data feeds such as the Rithmic feed that I use. This alone is a large advantage. But beyond this, due to the structure of NinjaTrader and its use of the C# programming language, we have been able to accomplish amazing innovations in trading technology. Anyway, enough on that for now....

Next week, I expect to see the market break from the current congestion. Lower is the more likely scenario as we stand now.  On the report front, keep an eye on pending home sales on Tuesday, Non farm employment on Thursday along with other numbers on Thursday that could be market movers. The same stands for Friday. So use caution at or about these times. Unscheduled news such as the Europe situation are also worth keeping tabs on.

Speaking of the Europe situation. This unfolding story is eclipsing other issues that would or should be mainstream stories in the US, but that are largely being ignored.  So, keep in mind there are layers of potentially bad information lurking in the shadows.

What would this article be though without a chuckle reflecting on the folly of the Facebook (FB) IPO. This stock was released at a price of exceeding 100 times earnings (translated into English that means it will take 100 years to earn the cost of the stock at current rates).  There were massive mis-executions and lawsuits are flying every where with accusations that FB gave certain people inside information that was not available to the broader buyers.  OF course Morgan Stanley made a fortune on the deal/ JP Morgan over a billion as I recall and they are wrapped up in it too.  I feel bad for some of the simple folks who had orders put in their accounts they did not buy because of the mis-executions, and are now down thousands of dollars wondering who will make it right. If history is any indication, mom and pop will get left holding the bag when it all comes out in the wash.  Wall Street; you gotta love it :-)

Wishing you a wonderful holiday, and thanks for supporting the blog!

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