Today’s Economic News:
Waiting for an interest decision out of Europe. Japan just dumped a pile of cash for a massive intervention plan.
Quote of the Day:
He is poor who does not feel content.
–Japanese proverb
Featured Breadth Chart of the Day:
A very nice hold on the New Highs/ New Lows, remaining in the 90s and making a bullish statement.
Comments and Levels for the Front ES (S&P500 – Emini futures) contract:
Short: 1694
Long: 1670
We remain stuck in here between what is now 1701 and 1660 as the shutdown has us a bit strangled. We revisited that 1675 area yet again and have now formed a rather ugly head and shoulders that targets out to the 1660 area. We scooted our target down just a bit based on that.
We do think the market here is biased to go higher, it just has the boot of the shutdown on its throat right now and a lack of commitment until things settle down seems to be the trading norm. Sit, watch, and wait. It makes it very difficult to trade as the moves are based on rumors and actions.
For us, 1670 now marks the breakdown area. A move below 1670 would have us looking for the 1660 target. On the upside, 1694 serves the same purpose with a break leading us to below that 1701 is just around the corner and a possible reversal spot.
I am self employed and for 3 days I have tried to get through the signup procedure for Obamacare. I feel like a bull right now, I want it but I just can’t get it for technical reasons.
On the MiM: Reversed MiMs
MrTopStep’s closing imbalance meter, the MiM, is a premium product which you can read more about on the site at http://closingimbalance.com. In short, the meter is an accumulation of early imbalance orders and an attempt to predict the closing auction and find an edge in trading the close.
I write a blog entry each day about my experience, observations in my quest to use this incredible and unique data to trade successfully the ES Mini during the last hour of the NYSE markets.
I got lured in by the MiM alignment yesterday ($ > 150MM, $PCT < 66%, SYM PCT < 66%) those are the criteria with which I enter the MiM sometime between 3:20pm ET and 3:30 pm ET. During that time we watched as the MiM began yet again to evaporate some of its signaling strength to the point where we actually lost the sym pct. That is the time to cut losses from a reversing MiM.
Yesterday was a disappointment for the direction and so I decided to get up early this morning and run through other disappointing MiM trades. These are days that had strong MiM readings according to my rules above. We only have data going back to July 1st, but since that time we have had 21 solid MiM signals.
The arrows on the bottom indicate a directional profit from the MiM, that is if you entered between 3:20 and 3:30 in the indicated direction of the MiM (sell imbalance = short, buy = long) you would have had a profit into the close. The arrows on the top indicate MiMs that ran counter to the signal.
Including yesterday, there were 6 counter MiMs and 15 directional MiMs. Mind you, I have done this early in the AM by hand and I want to do a more thorough study sometime soon. The purpose of the study was really to find out if there was follow-through on the day after a reversed MiM, that is if we have a buying MiM that sold into the close, did we see a gap up or buy begin the next day, a kind of delayed reaction.
The July 22nd reversed MiM did see higher prices the next day and the reversed Aug 15th MiM gave those caught short some profit if they held overnight. The August 19th reversed buy MiM gapped down the next day and although it did recover to the previous day’s highs, would have been a tough one to hold onto. On Sept. 9th we had a decent sell that was bought up to the highs on the close and a hold there would have killed you as the market ran.
In conclusion, I don’t see a definitive pattern of follow-through yet on reversed MiMs, although looking at yesterday’s reversed MiM, it would have given you +10 overnight if you could have held past the cash closing.
If you want to join the meter readers you can go to: Join the MiM
Comments about TLT (Twenty year Bond ETF):
We remain in a bull-flag configuration and today watching for 105.50 to hold with a failure pointing to 105. A breakout to the upside of the down-sliding consolidation won’t be confirmed now until we trade above 106.75
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Breadth Charts in Full :
Zweig Breadth Thrust:
Neutral.
Cumulative Volume Index:
Neutral.
Number of NYSE issues trading ABOVE their 40 day moving average (40DPI):
Neutral.
New Highs / New Lows ratio chart :
New Highs bullish.
Trenders :
Short Term Trender – McClellan Summation Index:
Bullish.
Long Term Trender – Cumulative 4-week Highs – Lows (the fat lady):
Bullish.
Thank you for Reading –
Marlin aka RedlionTrader @redliontrader
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