Spi in profile 20 /9

the battler

There are 40 hits at 9100 and it getting a little over done..if anything a step 4 move back to 8900 is most likely , the bulk of recient the volume is set above value , and price has not reached higher yet.Mavs are alomst converged and effeciency is close signaling a move is near . However if it falis to break down then it must go higher .

inside dristrubtion 10 /8

Here is an example of a distribution inside another distribution..completing the 4 steps in quick time , it is still part of the 4th step in the larger time frame. and this trading bracket is comming to an end .

SAME AGAIN ! WEEKEND 7/8

Another normal distribution , completing the 4 steps ..there was greater price control in this bracket with a high percentage of time slots hitting the value price of 4537.Mav's converged again going from step 3 into step 4 , and we will probably see another convergence as we wrap up step 4 before moving on.At this point no clear direction but the possibility of testing levels lower should'nt be dis regarded.

Intresting stats.

Intresting that this new trading range has stopped the market dead in it's tracks so far. There are 89 1/2 hr time slots used since we broke higher from the previous trading bracket , of those 89.. ( 44 or 50%) have traded at the value price 4535 which is just above the 50% retrace level( 4528) for the whole rally.IN the previous trading bracket there where 277 1/2 hr bars and only 48 of those or 17% traded at the control price which was higher on the re-trace scale at the 23% re trace level.
SO it's obvious the market has paused ,the current trading is between 4548 and 4520, under 4505 and where back in the old trading range with the value price down at 4467 ..it must get above 4550 to continue higher .AS fair a I can tell buyers and sellers are about even here , there is no imbalance , so there's not much to trade.

44

ONE FOR THE BEARS

WEEKEND 31/7

Another perfect distribution following the 4 steps in the same fashion as last weekends post .In the 4th step we hit the 50% re-trace at 4423 ( low was 22) and now a perfect little distribution inside the whole thing as we wrap up step 4.Just where we are headed out of this I can't tell , it's looks like we will achieve another effeciency in this step 4 process as the mavs come together and where we go from there will be the go with entry.

RE-TRACE AT LAST 30/7

Took awhile comming with 46 1/2 hr hits at 4488 before it finally cracked getting set wasen't too hard with a sell order at the highs and a 10 tick stop loss.The market generally moves away fast , when it hits the 3rd standard deviation of the curve. The risk is a breakout , which happens sometimes but in this case it did'nt and I put that down to the massive development in the previous bracket and also the range in the emini S&P ...a chart I set up some time ago.That chart show two things firstly the relationship between the vertical and horozontal nature of the market and also value ..the blue line being the 200 day MA ..above it the market has been to expensive and below it too cheep.

28/7

ANOTHER NORMAL DISTRIBUTION
aprox 27 1/2 hrs at value 4472 puts us in the 3rd step of the curve , a 10-15 tick range extention to the upside last night was quickly rejected.Our mav's are drawing closer toegther and a session or 2 should have us close to an effeciency.With the CPI figure today any thing can happen but while the selling tail above 4500 remains in place, I'm sure we will see the lower side of the bracket sooner or later.

weekend 25/2 THE CURVE

Not much to add to projections here but a review of where we have been and a description of how a bell curve develops in the market,from this section of data, looking at the market this way puts alot of random activity in to some sense of order.

First the step 1. the vertical move.

step 2. are the levels that initally stop the up move.

step 3. the market fills out .


step 4. the retrace ( to the 61.8 % level in this case )following the retrace the market again fills out creating an effeciency,The step 4 in this case produced an almost perfectly balanced bell curve it self.And the bulls finally won the battle.

The new step 1. with a break out . intresting the move begins at the control price( value) where I placed a mauve arrow. So fron one value ( 4390) we attempt to move on and discover new prices. the re connecion comes back under 4445, the question now is will it go on with it or will the current control price with 66 half hour hits continue to capture the market.the whole bracket mantained a nice up trend line , but for now thats all over and you would'nt say that this current move is all that convincing .... YET !...There are already 14 1/2 hr bars hitting the current control price of 4462, thats probably not enough to say the intitial force has been shut off yet but it's getting close.

For anyone that wants to have a go at looking at the market this way the first thing you have to learn is to recognise the vertical step 1's it's not that hard , if I can do it.
Second if you don't have a bell curve histo , in your softwere or market profile , you might have a VWAP study ( volume weighted average price ),failing that everyone has a mav study, on a 24 hr market like the spi a 200 30min bar av will put you on the batting crease, for stocks that trade only 6hrs per day probably 40 or 50 bars av will do it and from that you should be able to see what the market defines as value for that particular instrument. From there you'll be able to see that often when below value they buy and above it they sell, and thats why you'll hear alot of people say that the mav is providing support or resis , becauce trade is attracteded to it because what 95% of people miss is the fact thats it represents VALUE and thats why it goes there.When you get a price /value effeciency you'll often see various mav;s converge .Sya your looking for where a new step 1. might begin then if you've got the standard 20.50.200 mav's they will often converge around the point where a vertical phase of a step 1. begins, as we move from effeciency to in effeciency and price discovery.

Horizontal Rules 22/7

The battle truned out to be a 50/50 draw..and where back going sideways again.
Big Ben put the Kibosh on any chance of an upside break out.
Leaves us with a selling tail , single prints.
and some responsive buying into the close, the single prints represent minus development ( a force in the market ) in the srt term and untill there taken out I'll be playing it from the short side.
It will be intresting to see if the buyers over the past week decide to cover.
My guess is there probably average Long at about 4300-4280.So where looking at critical support today.

The battle 21/7

Back ground and the commercial activity suggests the bulls might win this one .
refer previous post .

Interesting to see patterns repeat

This is a repeat;; both in the early days of the week.The last one is higher than the previous one that should be intresting to note.These patterns are caused by commercial activity in the market. It suggests to me that the big investors are buying, however we are still within the trading bracket.
The way the market is left today with this thin profile is a waiting game for me , I'll give it a session or tow to see how it develops. The space is filling nicely which means we are drawing closer to a value effeciency .And there we should move on to discover different price ranges.

WEEKEND 18/7/2010

The profile chart below describes how I read the martet data, it's the Australian share price index futures contract; but it could be a currency ,intrest rate product or and individual stock like say BHP.The output reads the same way.Each profile shows the area of value for that time the shaded area defines where 70% of trading took place, the center line shows the point of control or the value price at the widest part of the profile , the price that had the most hits.
1. profile one shows the market still in the vertical phase.

2. In the second profile we begin to see more horozontal development , a sign that the vertical phase is comming to an end. This is where the first sellers arive.
the bottom of this profile is very close to the value price of the first profile. the bulk of the volume is below the control price suggesting buyers still see value and are prepered to re initate longs.

3. Profile 3, we see the sellers back again and this time more dominate , it's fair to say here that the initial up move is being shut down.They move price back to the bottom of value in profile 2 (A)where the buyers return in profile 4.

5. BALANCE !!! buyers and sellers at evens here .

6. A probe higher is rejected and the first signal that we could have a top in place ....here we see the sellers begin to take control.

7. the sellers have the upper hand . while the value price of profile 3 provides support (B) which breaks.
Reading the market this way dosen't exactly provide me with entry and exit but it does tell me the condition of the market , and which is the best aproach to take when making trading desisions.

In the bar chart it becomes obvious that the market is following it natural process of distrubition and is attempting to fill the space, where the minus development exists , and in so doing completing the curve.I'm not trying to predict anything, just go with the flow or as they used to say GET WITH THE STRENGHT AND BANK COMMON WEALTH !

weekend 11/7

The previous weeks end headline was:

WORST QUARTER SINCE 2008

The end of this weeks headline was :

Stocky rally in the best performance since 2009.

Crikey !!! it was almost like someone in a rage jumping behind the wheel and flooring it.
Well one thing I like about markets is nobody forces anyone to do anything , if the driver dosen't wear there seatbelt bad luck ! Thats the fair an open kinda world I like.
Higher ???? possibly, I'm watching treasuries .
The Share price index : last weeks madnessss will resolve itself in a couple days , and we will get a clearer indication of future direction then.






Boy a few wild swings last week.

en.

Wednesday 7/7

Well not only did the mrket reject prices in the lower part of the previous trading bracket it went straight into re-trace mode, attempting to fill the space above.
Fund managers all excited about the prospects of the new financial year,with there money bags burtsing with cash freashly garnished out of other peoples salaries ready to have a lash at it. You could almost feel the excitment from there little work pods all over the city.A brief pause at the point of control, before the RBA's desision and yippy io
up we went with good volume.Well so far it's failed.... where trading back inside the bracket.This is normally a very bearish signal , however lets no put to much of a damper on youthfull enthuasium we should at least let them have a go at a double top, fill the space and complete the curve.
Looking at the leader the S&P 500 you will see that the bearish failure is indeed in place in fact it did'nt even make it out of the trading bracket. Not to say it can't make another attempt, but for now caution is a good word from my perspective.Support for the S&P500 is around 1018.If they manage to get our market higher today watch for a sell off into the close.

Weekend chart comparison 3/7/10

Compare the 2 charts below one includes space for time defalt( bar chart) and the other dose not(profile chart).
The profile chart compresses time to show both volume and value.

There are 100 : 30 minute bars contained in this trading bracket 40% of those time slots have traded at the control price of 4219. Above this level prices have been deamed to expensive and below too cheep.From fundamental knowlege we know that to profit we need to buy below value and to sell above it, the market smiply facilitates this process.
Minus development is a force in the market, it is defined by where the market will not trade. The more time the market spends filling horozontal time slots the more likely it is that the minus development will be tested.However current price action suggests that the minus development above the market is still valid.A mav cross followed by a failed auction late in the session suggests the support at 4205 will soon be tested.
Accepting prices below this support level adds a further bearish tone to price action, and a break away from background volume could see the market resume a vertical faze to the downside.On the other side if support holds then it becomes more likely that the horozontal nature of price action will prevail and we could see an attempt to re-trace and fill the space above.It is also important to note that the current structure(a selling struture ) is within the value area of the background structure , telling us that for now the background is still in control and capturing price.When trading we should all be alert to the fact that we have the opportunity to make greater returns when the market is in a vertical faze(non-random) as apposed to the horozontal(random).85% of the time the market is horozontal,leaving us with just 15% of time to reap the best rewards.






Compare the two charts the levels are the same .
A reference to my blog can be found on the ASX website charting libary.
Topic: Market Profile

Effeciency before non farm 2/7

Friday 2/7/10

Spi range below is 4185 to 4280 ..the point of control ( value price ) is 4219 unside mav cross is un convincing with the macd histo heading lower.

THE E-MINI LAST WEEK EXPERIENCED EXTREME PRICE CONTROL CLOCKING UP 85% OF THE BARS AT THE POINT OF CONTROL 1161.50 , THIS IS A SIGN THAT THIS TRENDING MARKET IS GETTING WEAK. IT REGESTERED REASONABLE NEGATIVE DIVERGENCE THROUGH STEP 1... STEP 2...AND STEP 3 OF IT'S DEVELOPMENT , SUGGESTING THAT THE STEP 4 ROTATION WAS MOST LIKELY.
THINGS TO WATCH FOR..

1. WILL THE MARKET FILL OUT THE RANGE BETWEEN 1156 AND 1145.

2. WILL IT REJECT THIS FILL OUT , AND IN DOING SO GIVE A STRONG SIGNAL FOR
CONTINUATION HIGHER.

3. WILL IT FILL OUT THE SPACE BETWEEN 1156 AND 1145 OR WILL IT BREAK LOWER , PUTTING A BREARISH TONE ON THE PRICE ACTION.

WE KNOW WE HAVE NEGATIVE DIVERGENCE, WE KNOW WE HAVE HAD PRICE REJECTION AND WE CURRENTLY HAVE MINUS DEVELOPMENT TO THE DOWN SIDE. WE CAN SELL THE CURRENT RESISTANCE OR BUY THE SUPPORT , WITH A STOP AND REVERSE IF THINGS DONT WORK OUT.IT'S TIGHT IF WE BREAK THE LOW OUR FIRST SUPPORT IS AT 1145.a BREAK OF THAT AND WE COULD SEE MUCH LOWER PRICES. IF WE BREAK THE HIGHS , GO WITH IT UNTILL WE GO SIDE WAYS AGAIN.

Remember the prosess of orders entering and exiting the market is random, if you like to reduce your risk , try to avoid entering medium term trades inside the value area ( shaded ) where most orders are processed. To reduce your risk try to have your orders filled at prices that have 3 or less tpo's (time price opportunities) attachted to them.

Weekend Summary