Thursday, March 12, 2009

This Morning

Here is a 5 minute bar chart of the last two day sessions in the June e-mini contract. (Volume started moving from March to June this morning.)

Since the trend is up I bought near the open because indications were that the 708 overnight low ended the reaction from yesterday's high. The market dropped about 6 points from its open, still within bullish parameters, and I bought a second unit (lower two blue arrows). A rally started immediately and so far has carried the e-minis as high as 727.50. This rally was bigger than yesterday's early rally (green rectangles). Moreover, as the market approached yesterday's high (red dashed line) at 729 I saw two high volume bars (two pairs of red arrows). The question was whether or not this was climactic action or preparation for a breakout.

My thinking on this went as follows. Normally on a breakout move, the high volume develops after the breakout, not before. Moreover, this high volume was showing up near yesterday's high after a rally that was bigger than yesterday's early rally. This combination of facts led me to deduce that the sellers were taking temporary control of the market and that a reaction of 8-10 points would develop soon. So I sold my longs at the highest blue arrow.

Midpoint support is now at the purple dotted line around the 718 level. I plan to be a buyer again on a break of 10 points or so.


Anonymous said...

Your range of the day was 708-733. So far we've hit 708-732. Awesome call. Do you think we retrace back to the 718 level still?

Anonymous said...

lines in the sky from gann sq geomtery are 719, 733, 736, 746, 753 etc..

Marcolien said...

Thank you for taking the time to make this blog so interesting and educational. I really appreciate what you are doing.