BTW, your 912's double top divergence call was spot on today......excellent job! The strong initiated selling that came in on that second 912's touch was "textbook"......entry short with a divergence in place and as the initiated selling poured in was very optimal for taking a shot. I see you have those excellent "trend following" opportunities marked too....on the smack down sell-off run from the 911-914 Delta Zone!
If you subscribe to the notion that "CD drives price" then price action would indeed lag CD action. I've seen cases where the opposite is true, i.e. CD is lagging behind price (aka hidden divergence), especially at tops/bottoms. I don't have a clear idea as to when one situation exists vs. the other. D.
I guess I get what you're saying. I like the fp method better at looking at supply instead of candlestick delta bars. Maybe I'm just not used to it. But I incorporated the divergence into my strategy, so it's all good. Thanks.
Well there is still some held contracts remaining from the last time up to the 924 area, and this current sharp run up to 914 did not yet neutralize all the previous held short inventory (the rally did not spook everyone out). Now most likely that remaining held inventory is from pricing levels up near the 924 area (not from down here in the 911 to 914 delta zone). The tell tale sign for me to stay in the SHORT game 911 to 914 zone was that last over 35,000 contract blast of short covering on the 26th right at the EOD. Buyers from lower pricing levels dumped off a huge amount of held inventory (LONG holders SOLD to cover) into the weaker hands of short holders bailing on large amounts of held inventory (SHORT holders BUYING to cover). The previous sellers of the 911 to 914 area from the last time we traded at those levels, felt threatened by the very strong rally knowing the real "zone in the sand" was the 924-927 area above their held postions.....so they bailed in a massive wooosh going into the close on the 26th. That left us with many previous buyers from lower levels already now cashed out and neutralized. It also left the previous sellers of the 911-914 mild delta zone neutralized for the most part (bailing out on their remaining held positions with minimal profits). This order flow volume distribution left us in a vacumn at the 911-914 zone, with the NEED for any additional rally above the 911-914 zone on the backs of newly initiated buying. There was no longer any significant held short inventory from these price levels to cause additional short covering rallies (proded by light buying volume). Buyers would have needed heavier buying order flow at these high prices (paying high retail prices), to continue to advance price to the next held short inventory up at the 924-927 zone (where there was not much inventory left to use as the "exit" into weaker hands once there). Buyers actually caused TOO STRONG of a rally yesterday with that 3'rd deviation move......they spooked out TOO MANY shorts too early and were stuck in a vacumn at the 911-914 zone. As a byproduct of several rotations into the 911-914 zone today, with no signs of breakout initiated buying, the sellers eventually jumped back in and took back control of price.........then DOWN WE GO! Now price will have to trade back down to a level where buyers will be willing again to attempt inventory accumulation....I will be watching!
makes a lot of sense; especially with the up channel we had between 10:10 and 12:17 (EST) not enticing buyers to break the 912.75 high, it soon became clear this up channel was actually a bear flag forming as the smart money realized the buying pressure was minimal. Also, I'm sure the SM realized a golden opportunity to take out TONS of stops in the low 900s. As you mentioned, the short inventory was cleared out at EOD yesterday so where's the size? Stops/long inventory in low 900s and below (inventory held by the weak hands who joined yesterday's rally way too late), so good direction for the big guys to take the market
I had an intraday scalp sell signal as the market traded 901.50/901.25 but other than that nothing special at these levels. The 888's low did have a LONG divergence showing in the AH session though. http://www.charthub.com/images/2009/05/28/ES.png
I see two great back-to-back long divergence signals near the end of the AH session... too bad I didn't act on them. haha
Well how about that, the price has dropped and I still do not understand resting rotating inventoried CDs. 10:05 sosueme