I am amazed to see we are at the end of another month ending next week. We have managed to get through August, the most volatile of Months traditionally with relatively little volatility (and volume).
The market seemed to find a bit of a bottom in the last couple days. Coming off the 1397 area aggressively today. I have an upside minimum target of about 1419 on the ES for next week. but I am thinking higher, like 1430 or so. My upward forecast for last week was wrong. I did not predict the downside we saw this week , and only the first day or so of the week was correct. This is why I put out the shorter term forecasts during the week. Essentially reducing trading to short term trend trading (at least for now). This has not been without its difficulties as the market exhibited a lot of overlap of the bars for much of the week and this makes for difficult risk management when compared to a day like today (Friday) where movement was clearer and less congested. I have mentioned before that much of a days range can often be reduced to a handful of bars. For more on this interesting topic read here: http://markettradersjournal.com/how-ranges-stack-up-in-todays-markets/
The sales site for the Nindicator project was approved by the National Futures Association (NFA) this week. This is an amazing accomplishment as I believe it is the first ever such approval of a site that offers indicators and/or trading tools. I am hoping the tools will become available near the first of the month or so. The programmers are finishing a few more details. It is amazing to me I have spent over 9 months on this project. Looking back, it happened fairly quickly and I learned a lot I would not have otherwise learned. When you have to communicate your ideas to others, you must be concise and must deal with intricacies you otherwise might not ever have thought of. A teacher becomes a student and the student becomes a teacher. Anyway, I am glad we are nearing the culmination of it all as I have more things to work on :-) I have made some recent improvements and additions in the last few weeks. I will create a members area on this blog for advanced applications for Nindicator users etc.
Let's take a look at the Value Profiles:
This composite ( on the right) is a 22 day composite and has a high volume node at the 1413 area. Above this should be fairly free sailing. I will refrain from posting the 220 day composite I have been using as it has been used a lot in the daily Market Open Reports on YouTube . You can see after 3 fairly hard down days, we have come strongly off the lows as I had mentioned. So, the first target is to get through the 1413 area and then test the VPOC at 1422.50 area. From there, I am thinking we might be able to get up to the 1430 region. Note we are dealing with about a 30 point range this week. Let's take a look at the cycle charts:
The weekly ranges continue to decline. We are now down into the 35 point range. This tendency is, of course bullish. The cycles are nearing their top on the weekly. Based on the patterning here on the Monthly chart, I am seeing a narrower attempt at a new high. This is not particularly bullish and would suggest a retest of the high will be faded by longer term traders. On the weekly however, I am seeing a bit of a different, more bullish pattern. I have mentioned in past weeks that the US markets may likely be a safe haven right now. The market, especially the ES is driven in large measure by Apple which was about 4.2 % of the index last time I checked. This may not be that much, however with it's stellar gains, it has impacted the S&P 500 substantially. Some research suggests the index would be negative this year if not for Apple. Either way, we have a blending of ingredients making this market over, upwards, sideways and down as the old song used to say (at least in any short er time interval).
We did manage to see some good volume on a couple days this week, however these were down days. This is not a good sign of course, when down volume is more substantial than up volume. It suggests there are some scaredy cat longs out there; maybe enough for the bears to get more control? We will see in the coming weeks. After all the season is ripe for it through about the 3rd week of October.
Next week we have a medium busy report schedule, not unlike this week with the bulk of important reports coming our Wednesday through Friday. I will not enumerate them this week. Follow the Market Open Reports where I try to remember to go over them each day.
This week I have continued doing research into my price zone distribution theory. I am beginning to think I like this more than the volume profiling stuff in many ways. It is price based however. Now that I wrote that sentence however, I am thinking maybe I will apply the study to volume and see what comes of that. One thing that I really key in on in much of my research is where, or what market environments certain indicators or tools are best suited for. The price zone distributions can help you to identify if you are in consolidation better than other tools.
OK, That is about what I have for you this week. If we do manage to head lower, I am thinking 1387 is a first target as we have already tested the 1399 high volume node.
On Monday AM, an open above 1411 should be pretty bullish, below 1402, bearish. Trading above 1402 is bullish, below bearish.
I figured out how to imbed videos on this blog in the last couple days, so I will be able to share with you in an easier way using video.
Have a great weekend, and thanks for supporting the blog!