What is not happen yesterday and today's profile

We have seen yesterday's bullish profile below. I thought it would be interesting to discuss what did not happen. We opened at VAL and was immediately bought up. It was very interesting to me that we did not probe below any recent lows (on pretty negative start and news). The 64-67 area was of interest to a lot of buyers and the commercial buying as shown in my filtered chart yesterday continued throught the day. In fact right after my post it went to make higher highs. From a trade perspective I had a long in the C period which I exited all out too early. And two shorts that took back a large portion of my profit.

Yesterdays dominant flow was indeed too dominant as was already evident in my post. I have noticed this time and again(but I am always surpised by it ;-))that when the other timeframe grabs clear control of the market, they are generally not deterred by short term news. My sense that the market might come to its senses and the weak longs bail (which is the reason why I exited early), did come true. But the weak longs simply sold into resting bids who were buying for a different time frame. The buying in the futures markets managed to pull the equities markets up.

In retrospect, here's the lesson I learned from yesterday. When you exit a trade too early. It causes you to enter into semi-revenge trades. Although I had thought I dont take revenge anymore ;-) the mind finds a way rationalize it (especially if price lingers at a level too long). You start getting visions of the future.

So here is today's profile so far. We gapped open higher well above value.



There was a a nice trade entry in the F period low and with oppurtunity to scale out as we semi-stalled in the I. I have a little runner to manage the rest of the session.

Todays dominant flow in the IB came in on the buy side. In the bid ask analysis below, the 6:50 bar got the first wave of paper in. And the 6:59 bar sell off was absorbed into the resting bids.



The PNF chart below shows where we have been flat lining. The PNF or point and figure chart is a great tool to understand what the price is trying to do. In fact it is the genesis of the Market Profile charting. It takes out a lot of noise in the traditional charting systems.

A futures driven day.

Market was dealt the wrong day ( as far fundamentals & news) for a range extension to the upside by the longer timeframe players. Nevertheless, they found a way to do it. The day type so far is the normal variation of a normal day. We have found ourselves now all the way from the low value area to 1.8 times the initial balance. It was a rally led by the futures market.

If you noticed the market parameters, the future market dragged the Market Trin with with (in other words, the equities had no choice but follow the futures market). The futures rally off the lows was fairly broad based. It was clearly a day when longer term players took control of the market.

Where is the big money playing today?

Nothing significant so far. Quite surprised on the contrary that some of the big momey has been on the buy side like yesterday. Some intermediate short term covering. Not much action. With crude making big gains, and weakened dollar. Watch out for any sign of inflection point with further weakness in dollar.

Heres a new view I am introducing. From time to time in the day I make the 30minute chart with a filter of 100contracts or higher. It gives you an idea of where the bigger money is flowing. So far we @ 26k positive delta. Which is a very different picture from the general market delta @ 6K or so. Again thus far.

Trading tools and the Palm Treo

My Palm Treo 650 was part of my trading tools and now I miss it immensely.
This is how I used it. I have sprint as my wireless provider and have their unlimited data plan. I used the Treo as my backup connection in case the DSL went down. On at least 4-5 occasion the Palm's connection has bailed me out flawlessly. At least on 2 occasions I was in the middle of a trade and was able to manage it through my Palm (most charts on as well). I use a third party software to use the data connection. Ever since the timely demise of my Treo I have my dial-up ready but really not comfortable with it.

Now I had a big misunderstanding of Sprint's new deal and I have cancelled my 800w at least for now. I feel like I was misled a little. So for now I have activated another phone and until my upset state of mind come back to balance;-).

But from a trading perspective I think it will be cool to have a backup on their faster network. Sprint claims 350-500kbps upload and 600-1.4Mbps download. I like Palm and hope they would survive as company. They need to deliver on their promise of cool new things.

Having a nice backup is important. Dial up doesnot really cut it I think though it will get you out of a trade. Especially if you are like me analyzing tick by tick volume at entries. Hey, maybe I should call Sprint tommorow again!