well i have been advocating selling or fading the rallies since the 12th of september and i have discussed what i watch during the trade day in several threads. i feel that having a macro economic sense of the current market environment can help a trader to put his/her trades into the context of the markets realities. the markets and the players are always changing so i try to find out and observe what is new or what is different --- the past 6 months have been a noticeable liquidity exchange and i have talked about this in several threads. i have made the observation and put forth my opinions so it is up to each person to find methods to benefit from these events. at this point the market is moving into a new dimension as the liquidity war phase seems to be dissipating --- i will keep observing to see what we have next.
Let me ask you something MacroEvent. Do you follow the Temporary and Permanent Open Market Operations? Is this part of your liquidity analysis? Or are you referring to something else?
The market is down ~1%, and already some people, stricken with fear of missing a rally, are itching to buy. If today was indeed a key reversal day, the market must be near a top, not a bottom.
i look at put/call ratio's, daily volumes, buy/sell program activity of equities/futures. i look at how the nikkei and eu markets trade each night and their volumes. i document and make note of trading activity during and after various economic news releases and how the reactions change over time as the economic cycles change {one day an interest rate hike will have the market buying and the next day it will cause a sell-off --- when and how do these flips occur and what was there affect in points that trading day}. i try to catch the psychology shits or sentiment shifts that are from action {from real market movement --- not talking heads on CNBC changing their tune}. another thing that i watch during the day is sector play and advance/decline ratio's --- this usually can tell you when a rally is broad based and to be respected or when to start fading the move at the first signs of volume exhaustion. watching the health of the full market during the day in conjunction with the trade indicator signals i use help me to know when to be long or short for intraday trading.