The chart above illustrates a good way to analyze the NYSE Advance - Decline Line and $TRIN throughout the day for clues in underlying market sentiment to aid in trading the ES market.
In the early morning trading on Thursday (03/20/08), the $TRIN started to show signs of mild negative sentiment, but the NYSE Adv - Decl indication remained positive (higher highs and lows) until 1144 ET. Apparently, there was increasing selling volume into the market advance, but it was not strong enough to stop the advance in prices.
We then had the typical lunchtime correction, followed by a continuation of the uptrend in the afternoon session. The NYSE Adv - Decl indicator signaled the end of the correction at 1322 ET with a higher high starting a new uptrend. The $TRIN turned positive at 1334 ET, confirming the positive sentiment. The market saw a mild correction going into the energy market close, followed by a continuing of the uptrend until 1528 ET.
The ES chart above shows the ES price reaction to the underlying sentiment. The $TICK turned positive at 0946 ET following an early test of previous lows. As the uptrend ended around 1130 ET, we can see that the $TRIN and $TICK preceded the NYSE Adv - Decl indicator by 15 to 20 minutes in signaling the end of the morning trend.
The lunchtime correction was a nice 50% correction. The afternoon uptrend helped form good market symmetry relative to the morning uptrend.
The chart above shows the afternoon session in relation to the underlying sentiment indicators.
Again, the $TICK preceded the other indicatos in signalling the end of the correction. The NYSE Adv - Decl Line is a good conformation tool, as is the $TRIN. The afternoon uptrend officially ended at 1528 ET.
One addtional comment is that the $TRIN did signal an overall bullish sentiment by remaing below the values of Wednesday most of the day Thursday.
Charles
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