Thursday, July 23, 2009

Climactic volume

Here is a five minute chart of e-mini day session trading. I think we have just seen a short term volume climax (red arrows).

This implies that the market is near it high for the day and probably near the point at which it will begin a break that lasts a day or two. I think such a break is imminent for two reasons. First of all, the e-minis have risen eight consecutive days without breaking a previous day's low. This is an unusually long streak - a long term sign of strength but a short term warning of an imminent reaction. The second reason I think a drop lasting a day or two is likely is that today was an obvious breakout day to the upside. As such it will attract a lot of attention and this is likely to give longer time frame traders a chance to sell into strength.

Even if the market does break for a day or two here, I don't think it will go straight down. Instead I think we shall see some sideways trading above the 960 level first. I want to be a buyer on the first reaction that matches the size of yesterday's drop (purple rectangles). Support right now is at the midpoint between today's high and yesterday's late reaction low (red dashed line).


DL said...

Good stuff Carl! Right up to your initial 965-980 level. I believe alot of retail shorts learned a lesson these past few weeks. Well done!

robertlediable said...

chartlist password needed, can't access

keftrader said...


Do you think the ES will go back down and test the 960 area of support?


Carl Futia said...

chart password poblem fixed!

Tim- said...

Carl, Would you try a fade here in the 970's? or will you not risk your profit? You seem confident with your "feel" for the tape and from the looks of it, you're dialed in.

Kishore said...

Carl, your blog is one of the few blogs based on "naive" realism while much of the rest of the blogosphere appears to be based on naive idealism.

Congratulations for developing your own way of thinking and thanks for passing it on to others through your postings!

keftrader said...


I appreciate your daily thoughts on the market, and you a pretty good at this game!

Wish you can do a blog day on how u come up with these great daily ranges!

TradingNuggets said...

Excellent trades Carl!


Anonymous said...

shorting SPX at 980!