Morning - 08/18/08

The above chart is the difference between the High and Low relative to the 0930 ET Open for the ESU08 contract. The last entry is Friday's data, which indicated that momentum may be switching to the downside as indicated by the downtrend of the High - Open pink line and the uptrending Open - Low blue line.

Indeed, as soon as the equity market opened, the futures sold to the downside.

Charles

Hurricanes, ES Short-Term Momentum

Nice picture of Fay.




In the recent uptrend cycle, the market is showing some mid-month slowing of the upside momentum, as the Two-Day Rate of Change Indicator has failed to make a new high. Day-to-Day range volatility is also decreasing.




The $TICK moving averages (13 and 38 period EMA's) on the 30 minute chart has spent the last month making higher lows, but also has been making lower highs. The good news is that the averages are still above zero.

Charles

Friday Morning Review - 08/15/08

We have had two days of increasing range, so we were due for a more narrow range day.

I'm really enjoying the PaintBar Indicator on the 1 Minute Chart, which ties price momentum with $TICK momentum. The change to yellow is a good indication that momentum is changing.

Charles

Market MindSet

The solid cyan line is the 10 Day SMA of the (H+L+C)/3 Pivot for the ES Futures. Recently, a test of that average by the Two-Day Rate of Change Indicator was a signal to sell the market by the long term players. Now a test of the average is a signal to buy.

Remember that the long term players trade what they expect the economy to be 6 months into the future, and not what the economic indicators indicate what has happened in the past.

Charles

Don't Let Psychology Ruin Market Analysis

In the above chart, you can see the daily difference between the High and Low relative to the 0930 ET Open (Blue is H - O; Pink is O - L). This is a good way to see the short-term cycles. Notice how the H - O typically is below 10 points for two to three days before the market trends back to the upside.

Before the 0830 CPI report, I was anticipating an up day. However, the market reaction to the CPI report, and commentaries on CNBC started to make me think that the day was going to be a severe down day.

As soon as the market opened, we got indications that the market indeed wanted to go up as the short term cycle dictates that it should. However, my mind was still thinking down due to the CPI report, even though I have seen this type of reversal many times before. As it turned out, the market indeed trended up as it should, irregardless of the CPI and TV experts.

Lesson is to read the market rather than let external factors influence assumptions as to where the market should go.

Charles

ESU08 Observations

Above is the difference between yesterday's close and today's close for the last several months. Interestingly, when the market had at least a -20 or +20 point day relative to the previous day's close, the market momentum starts to decrease leading to an eventual correction in the opposite direction.

On the premise that momentum precedes price, we may see another down bias day, since $TICK momentum is still in decline. We may also be due for a three-wave correction to the downside, since we have seen a five-wave up move.

Charles

ESU08 ATR

Some may find this info useful, perhaps for range pattern. The daily true range and the 10 day ATR are calculated for the 0900 to 1600 ET daily time frame. The last entry is for today, 08/12/08.

Charles