Today’s Economic News:
Most of today’s news is yet to come and most of it from the US.
Quote of the Day:
To cease smoking is the easiest thing. I ought to know. I’ve done it a thousand times.
Featured Breadth Chart of the Day:
Too strong. We want another 9:1 negative down volume day to correct this market, but the Zweig is building strength in here and working against us.
Comments and Levels for the Front ES (S&P500 – Emini futures) contract:
Our swing short is back against the wall. We had 1654 as the market cap on this bear flag from the 1627 low on the 28th of August and currently price has hit 1654.75. We need a bit of a relief valve today so we have scooted up the mark just a couple of points here to 1657. If that goes than we are wrong and 1667 is next up with and eventual target at 1679.
There is a lot of news out today some scheduled an non-scheduled. Speaking of non-scheduled news, yesterday’s closing trade using the MiM was hit with some news into the close, but none the less, the MiM showed a strong buy bias and that is a turn around.
On the MiM:
The MiM was a bit squirrely yesterday and I still struggle to hone my skills in explaining my understanding of the MiM and to share clearly how I trade it. I see comments that the MiM was wrong or why is the MiM broken? I understand what those commenters mean but I want to be certain that everyone understands that the MiM is just data. To me it is like saying the RSI is incorrect when a trade goes bad, it is the interpretation or the trade around the data that is incorrect. The reason I bring this up is that if the MiM is broken (and it has been in the past.. but not yesterday) you can’t fix that, you can just throw your hands up and say it is broken and walk away. If, on the other hand, your understanding of the how to trade the data is incorrect, that now becomes a part of a learning process and you dig in and do research and look again and deeper and form a hypothesis and trade with new knowledge. That is what trading is about. It is hard work.
Yesterday on the MiM into the 3:45pm reveal 78.8% of the symbols were on the buy side and 88% of the imbalance dollars were also on the buy side and there was $765M more buy side imbalance dollars then sell side dollars. That is not a lie or mis-direction. Those symbols entered into the closing auction at that time. Locked in. Unchangeable.
Before 3:45pm ET, only a few of us have a big picture view of how the 3:45pm lock up is shaping up and that is because we have the MiM. That is the advantage we are seeking and paying for, a foreshadowing of what the MOC orders are likely to look like and from that we are trying to gain an edge.
The way I trade the MiM is to find a pre-reveal (before 3:45pm ET) entry and trade in the direction of a strong MiM. The MiM does not help with that entry, it is up to me as a trader to find that optimal entry and I tend to look for my entry between 3:20pm ET and 3:30pm ET, that guide line is just based on experience of past successes and failures. I am in the batting cages everyday.
So here is a look at yesterday:
That first yellow background band for yesterday was the entry zone where I look. I took the entry too close to 3:20pm and was hit with the Syria news and got pulled down into the downdraft. That happens. News trumps MiM. I then watched the MiM for reaction (orders pulled) and seeing none and knowing that the MiM was still strong buy side and that we had a nice squeeze the last couple of days post cash close I added and put stops in at 48.50. There was a very nice pre-reveal trade for those skilled enough to catch it, that wasn’t me as I pulled off just +1 on the trade.
My reading from the MiM yesterday was that we had a nice buy data indication on the MiM during a day with monster move of 20 points off the day’s lows and trading into the highs on the closing hour. To me it was worth a shot to see if the closing imbalance could move us higher on the day, it didn’t but it was still strong enough to shake off the Syrian news and hold up overnight, in addition that post cash squeeze happened again.
I am watching anxiously today for the close to see if a pattern of buying is being established.
If you want to join the meter readers you can go to: Join the MiM
Comments about TLT (Twenty year Bond ETF):
One would expect some test of 105 but in general we remain bearish with a sub 100 price target between now and 12/31.
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Breadth Charts in Full :
Zweig Breadth Thrust:
Too strong for my bearish liking.
Cumulative Volume Index:
Showing some real accumulation. We are not liking that for a 1606 ES call.
Number of NYSE issues trading ABOVE their 40 day moving average (40DPI):
Ditto from above.
New Highs / New Lows ratio chart :
Need to keep it under 90.. We don’t want those new highs to get above 100. Yesterday was 70.
Short Term Trender – McClellan Summation Index:
Long Term Trender – Cumulative 4-week Highs – Lows (the fat lady):
bearish with a twinge of green.
Thank you for Reading –
Marlin aka RedlionTrader @redliontrader
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