* It was a 2d right away twenty-four hr menses of real weak book flows; the failure to sustain bounces was evident relatively early on inwards the twenty-four hr menses in addition to quite telling, every bit the gain marketplace gave way to a trending trade. Stocks making fresh novel lows expanded in addition to almost 600 NYSE issues unopen below their lower Bollinger Bands. Interestingly, when that has happened inwards the past times year, at that topographic point has tended to move farther downside over the adjacent v trading days. We are real stretched to the downside short-term, with fewer than 10% of SPX stocks trading higher upward their 3 in addition to five-day moving averages. With VIX at 19, I await to a greater extent than volatile moves in addition to the possibility of strong short-covering moves.
* My adjacent twenty-four hr menses in addition to 3-5 twenty-four hr menses models cause got turned moderately bullish, reflecting the short-term oversold condition. Intermediate term measures are non at levels that we've late seen at intermediate-term lows. I volition move watching the lineament of bounces from the oversold degree closely; if weak, I would await farther downside. My game programme is to hold off for those bounces earlier reinstituting shorts. I'm also opened upward to short-term buying of weakness that fails to brand fresh toll lows.
* Pure volatility is quite high, which agency that each unit of measurement of book produces significantly to a greater extent than toll campaign than it did at recent marketplace peaks. With expanded volatility, moves tin extend farther than nosotros would expect--very relevant to run a jeopardy management.
Thursday, August 20th
* Volume flows were weak through the day, confirming the bearish expectations of the models in addition to the downside stock merchandise inwards the wake of commodity/China weakness. This weakness has carried forrad to premarket trade. Short term indicators are at levels stretched to the downside, but intermediate-term ones are not. For example, nearly 17% of SPX shares are trading higher upward their 3-day moving averages. That creates an surroundings ripe for a counter-trend bounce.
* The possibility of counter-trend bounce is also heightened past times the fact that 1 of my 3-5 twenty-four hr menses models is flashing a bullish signal, the showtime inwards quite a few days. Should nosotros run into weakness inwards today's session non confirmed past times book flows in addition to breadth, I would move willing to participate on the long side for a short-term trade.
* Pure volatility mensurate is elevated, also highlighting possibility of near-term bounce in addition to VIX unopen higher upward 15. Neither are at levels associated with intermediate-term bottoms, but I make await to run into to a greater extent than volatile merchandise going forward, which has implications for sizing, stops, in addition to targets.
Wednesday, August 19th
* Whereas Monday's marketplace could non sustain selling pressure--the number of downticks across stocks was modest--Tuesday was the reverse, with express buying. The book current mensurate was solidly negative on the day, in addition to nosotros could non cause got out the overnight highs. This record activity fit good with the bearish model signals from yesterday, in addition to we're seeing farther toll weakness inwards premarket today. I croak along to doubtfulness a sustained upside for stocks every bit long every bit nosotros run into continued commodity weakness, which speaks to global economical weakness, especially inwards EM.
* We tin run into breadth weakness inwards the number of stocks persistently trading nether their lower Bollinger Bands versus those trading higher upward (see below; raw information via Stock Charts). Note how the difference inwards the cumulative Bollinger residue preceded the drib inwards Oct of 2014. We are currently seeing quite a massive divergence; at that topographic point are exactly to a greater extent than stocks across the NYSE universe trading with important weakness than with important strength.
* Next twenty-four hr menses in addition to 3-5 twenty-four hr menses models are neutral, in addition to nosotros croak along to function on the bearish swing dot from yesterday. Game programme is to croak along to sell bounces that cannot move past times the overnight highs in addition to monitor book flows, specially should nosotros essay out back upward inwards the ES 2070s area. Downside activity without expansion of downside record activity has been a adept brusque term dot for net turn a profit taking on the brusque side.
Tuesday, August 18th
* We had an impressive rally 1 time nosotros held Friday's lows inwards the ES. My book current mensurate entirely got every bit depression every bit -250 early on inwards the morning, compared with values good below -1000 when we've hitting genuinely oversold levels. That was a sign that, similar Friday, nosotros exactly were non seeing aggressiveness alongside sellers. The ensuing rally has turned my adjacent twenty-four hr menses model real modestly bearish in addition to the 3-5 twenty-four hr menses models cause got turned bearish. We are at levels of pure volatility that cause got been associated with weak adjacent 3-5 twenty-four hr menses returns. My game programme is to brusque bounces that remain below the recent highs. On a swing basis, I am warning for indications of to a greater extent than aggressive selling that would cause got us below the recent back upward inwards the 2070s. That existence said, I'm also watching XLE in addition to XLB carefully for whatsoever indications nosotros could move bottoming inwards the commodity-related sectors. That would offering of import back upward to stocks on whatsoever push clit back.
* My adjacent query projection volition move to runway book flows inwards the premarket in addition to also at terminate of day, including the afterward market. It is non clear to me how the flows inwards these fourth dimension periods mightiness move related to those inwards the adjacent period, but at that topographic point are meaningful flows, especially terminate of day, that could offering clues every bit to the adjacent day's trade.
Monday, August 17th
* This article goes into depth nearly what I believe to move the greatest surgery work affecting traders. I run into a existent mismatch betwixt how traders recollect nearly chance in addition to how they really larn by their positions. It's also glib to exactly attribute this to "lack of discipline" or failure to follow plans/process. Quite literally, traders croak caught betwixt 2 imperatives in addition to the inability to reconcile those results inwards the quandary where nosotros programme trades but don't merchandise those plans.
* We've been seeing a reject inwards stocks making fresh novel highs for the past times several months (see nautical chart above), but we've also seen a drying upward of novel lows during the rangebound trade. My adjacent twenty-four hr menses in addition to 3-5 twenty-four hr menses models are real modestly bearish in addition to several of my measures are moderately overbought in addition to inwards ranges where nosotros typically run into weakness. My game programme is selling forcefulness that fails to cause got out overnight highs.
* Friday's merchandise saw a distinct drying upward of downside volume flows, followed past times consistent though moderate buying flows. Flows exceeding Fri levels on either side would strike me every bit important inwards establishing administration for early on merchandise this week. When you lot run into concerted hitting of bids or lifting of offers across the stocks trading the highest volume, you lot know that major marketplace participants are putting uppercase to work. That wasn't happening on Friday, every bit SPY book was at real depression levels. Need to run into bear witness of meaningful book flows earlier assuming whatsoever breakout from the recent designing of declining novel lows in addition to novel highs.
.
No comments:
Post a Comment