I knew the MAs were all flat. I knew the volume was low. I knew the market would be choppy. But did I stay out? Noooooooooo. Now I know what it feels like to be cabbage for coleslaw! Traded my ass off all day to break even.
It's easy to recap but that doesn't give you a real look at how to tell as it unfolds. Today was a replay of the 11, and 14th. What I used to deal with today on the ESmini Was largely the MACD and Volume. My MACD is set for 5,13,6 and I operate on the 5 min nominally. I move to the slowest duration I can as a rule to separate signal and noise. For me The NYSE open is the beginning of the dya and I do not get in until both the csh and futures prices move in synch. This means the day is tradable from about 9:45 or so onward. ES opened (9:30) where it left off (16:20). So I was just outside my absolute +1/-1 MACD limit for being sidelined. I like outside+/-1 as a minimum signal value under that its noise. So from 9:45 to 10:00 we got the picture for the day. Over 20k volume per 5 min was the min to drive the market and if it was less the price was in a shut down. This makes me calibrated to play. I do bars not candlestorks. The prorata vol on the 10:00 bar gav me an "inside" bar. I am slaloming from this point on with the BO above the 10:00 5min bar. Slaloming is playing the whiplash that is hitting those opposite me on trades. The deal is this. There is no chance we are going to get out of congestion. No volume there to drive a trend and we see anydrop off in vol causes a reversal. So the congestion is channeled by 10:00. we can play the outside of the congestion at the pace we know in the first swing. Make yourself go to the one min to check out the pertibation of volume there. It is as clean as a whistle; today is going to be a dull one for sure. This is a kewl correlation with the suspenceful news noise. It will be BS all day long on the news. Back to the 5 min and expect, at worst a thrid harmonic on the whipsaw congestion which tyou can play on the opposite side of the looser's trades. The pace is clear and it will hold until the congestion itself can't be sustained. Look for a volume pushing congestion . If the volume flags then you are going to see convegence of the lateral channel. At this point you have the picture. time passes volume flags and convergence looses its cycling damping. Cycling is gone and and centering takes place as a straight diminuition of price volatility. Once we hit this we turn to checking for BO time The volume goes to a constant minimal thing except for the telltale we want. This completes the basic runthrough. I'll do another post here to sharpen up a lot of details.
Okay. We lost the congestion (a lateral channel to make points in continually by whiplashing others; I call it slaloming using the periodicty and the known amplitude.) when the volume dropped into the 15K to 12K range per 5 min. You can see up to now there is an odd harmonic there. this is and accumulation/distribution over lay going on with hair trigger types who get screwed regularly. They crap out at some point. so the harmonic sort of drops out and come in as an even harmonic (square wave) during the convergence and even that drops out when the volumes goes down to 5k or less which leads to the centering as just a price volatility function. You can see how backtesters really drop the ball on this stuff by now. Lets focus on coming out of this volume "pushed" trending failure. Volume always leads price formations. It is written in hard stone that doesn't erode ever. count on it. you nailes the 11th , 14th and today exactly the same way. This is prevalent stuff. Okay under a volume regime (we are in a place of changing regimes) like centering we need to see what impacts the status quo. It is total dissagreement amount the players. I call low volume DU volume (dry up). We get a couple of shots of VDU. look and see. Total dissagreement of the players is VDU ville. No matter what it is that breaks into more volume than VDU volume, is something that will impact price. Here is where a lot of guys take it in the shorts. They misread price and do not understand that there is not enough volume coming along to sustain anything that is happening. Okay it will always be a failure to follow through on the price move. the only way around this is to bracket. stay outside of the fialure zone and do a bracket entry the first time volume sustains a BO. Slowly look at that BO up and see price slip right back to the centering value when the volume went back to DU. 13:30 to 14:00 is the time. This was a low volume failure to start the after noon. Volume hits at 14:15 and all you see is volatility. Why? This is because we are still under 20k volume for 5 min. You also reinforce all this with a dead MACD (under +/-1). All the day has left is end effects which show up as 4 slaloms and and a run for the exit which you just ride out for 20 min. You can see the volumme running the volatility only. Low slugs of volume narrow bars; double the low volume and you get a longer bar. Once you calibrate yourself to the day you can punch the orders like playing bluegrass. The volume leads and when it is no longr strong enough you get congestion then convergence then centering. Coming out of centering takes volume; if it isn't sustain you get a failure to BO and you wait for antoher centering. If volume is just giving you some volatility you are not going to get trending. QED. that was fun.
Thanks for posting that. I will have to read it a couple of times. I wish there was a way to do like in The Matrix and get hooked up to a machine and assimilate all of your obviously extensive experience.
what is BO? And thanks for the great posts jack hershey. Always appreciate a good read. Is there a possibility that someone post up a chart to compliment this thread?
it was a fed day today as well... check back and see how other fed days performed... although, in the context of current events things are not quite as usual...