ES Journal - 2021/2022

[Laissez Faire]

DO NOT put words in my mouth. I did NOT say that.

Volume leads price.

On the Daily, the last 3 days rally, including today, is on decreasing volume. That immediately tells me this entire rally is a retrace, not a reversal, not yet anyway. There hasn't been a breakout because the trendlines are wrong! While visually the channel looks correct, there is a "mistake".

I did not put words in your mouth. I asked you a question.

What's the "mistake"?

...but volume does not lie and volume leads price.

That's the claim, but it seems too unreliable to me, although I will readily admit that it may be due to my lack of understanding of volume patterns since I'm not an expert at reading volume.

What if price continues rising on declining volume into next week?

It seems to me that volume tends to increase during heightened volatility and if the market calms down in the coming weeks we will see lower volume as a natural consequence of that.

Just trying to learn more here.

Thanks in advance.

 

[tiddlywinks]

What's the "mistake"?

The mistake is in the channel boundries.

Simply (very simply)...

Using 3 point channels/containers. Points 1 and 3 determine slope, up or down, and produces the "right" trend line. Point 2 determines the "left" trend line

There are 3 points and 2 point-to-point moves... Point 1 to Point 2, and Point 2 to point 3. Point 1 to Point 2 is the dominant leg (in direction of the slope). Point 2 to point 3 is retrace.

In volume however, there are 4 movements for a completed pattern within a channel/container. This also includes an overlap, where one container reverses direction into a new opposite direction container. Let's not forget too... the market is fractal.... 3 minutes are included in 5 minutes, days are included in weeks, etc. IOW, containers nest.

Heres two pics Jack used to explain that MAY help. But they are illustrations, not actual charts.

If anyone wants links to Jack Hershey stuff, PM me. This is the ES thread.

 

[Laissez Faire]

In volume however, there are 4 movements for a completed pattern within a channel/container. This also includes an overlap, where one container reverses direction into a new opposite direction container.

Heres two pics Jack used to explain that MAY help. But they are illustrations, not actual charts.

If anyone wants links to Jack Hershey stuff, PM me. This is the ES thread.

That's a general problem with such illustrations. Actual charts and the market is much more 'messy' and sloppy.

 

[Concinnity]

Common setup going to be watching out for in the next couple of days / week is I think the fairly obvious one, which is for some of this move to be faded. Retesting the relative lows so many times, make's it a little more complicated for me though. If we had just shot right up to this level without all the retest, it would be a lot more straight forward clear fade.

Another reason I think I am just going to watch Sunday night action for more clues and wait until Monday before getting too aggressive is that we currently still have bullish divergence on the Daily and this is the Third test of ES Daily 2nd resistance (which generally doesn't tend to hold as well). More often than not in this scenario we would take out the relative highs on ES 4577.50 at least and potentially move to ES Weekly 2nd resistance at 4484. Before we move too much lower.

That's my plans and 2 cents. Hope everyone enjoys the rest of their weekend.

 

[SammyJ]

For all the events going on in the world ( war , inflation , interest rates ) the dow and S@P corrected little . The rising rates will compress and drop p/e’s. Earnings will compress as inflation eats people’s purchasing power . Coming off one of the biggest bul mkts ever we haven’t correctly nearly enough . S@p only down 8% from ath’s .

 

[Concinnity]

For all the events going on in the world ( war , inflation , interest rates ) the dow and S@P corrected little . The rising rates will compress and drop p/e’s. Earnings will compress as inflation eats people’s purchasing power . Coming off one of the biggest bul mkts ever we haven’t correctly nearly enough . S@p only down 8% from ath’s .

Yeah, what you say makes perfect sense, can agree with and am still certainly longer term bearish still based on larger charts. Not saying you said to do this at all, just saying speaking for myself I am going to continue to take it day by day and not try to front run anything based on those facts.

Whenever I try to add news in, it ends up hurting my trading. There's other people who realize exactly what we do and that's exactly why the market can move higher than some people expect or are prepared for(I mean it already has surprised a lot of shorts).

 

[Laissez Faire]

The bears tend to salivate when prices are dropping, but it's interesting to note that the largest weekly ranges since we started going lower from the top have been to the up side. The largest being this week at 304,75 points low to high.

In comparison, the largest week down was 221,25 points. This is using RTH data ignoring the overnight session.

This is also true intraday. If we look at the 5 largest RTH ranges the 2 largest by far was to the upside going from low to high on the day.

Slightly surprising is it to find that when looking at intraday volatility (as measured by the sum of the intraday gyrations) - we still find the largest pay day to the upside. The winner being the 24th of January this year with a daily range of 197.25 points and the sum of the swings being 1100.75 points using a 5 point filter.

I believe the covid plunge in 2020 was different, though. That was some real selling. This down turn have been fairly pale in comparison. Not even one limit down day.

 

[Concinnity]

The bears tend to salivate when prices are dropping, but it's interesting to note that the largest weekly ranges since we started going lower from the top have been to the up side. The largest being this week at 304,75 points low to high.

In comparison, the largest week down was 221,25 points. This is using RTH data ignoring the overnight session.

This is also true intraday. If we look at the 5 largest RTH ranges the 2 largest by far was to the upside going from low to high on the day.

Slightly surprising is it to find that when looking at intraday volatility (as measured by the sum of the intraday gyrations) - we still find the largest pay day to the upside. The winner being the 24th of January this year with a daily range of 197.25 points and the sum of the swings being 1100.75 points using a 5 point filter.

I believe the covid plunge in 2020 was different, though. That was some real selling. This down turn have been fairly pale in comparison. Not even one limit down day.

View attachment 280636

Yes, nice analysis here and on the other thread. If for some reason we open up Sunday night and tank, people will come out of the woodwork again saying how they called it. Never understanding it's about playing the probabilities in a consistent manner, not always being right, taking a risky or lucky trade.

 

[Builder17]

DO NOT put words in my mouth. I did NOT say that.

Volume leads price.

On the Daily, the last 3 days rally, including today, is on decreasing volume. That immediately tells me this entire rally is a retrace, not a reversal, not yet anyway. There hasn't been a breakout because the trendlines are wrong! While visually the channel looks correct, there is a "mistake".

And just to point it out... even with the still to be located error, the channel as is, has been a big money-maker. It is one the greatest things about JH... On fast charts, the system is self-correcting. On slower charts, such as the daily, errors can be difficult to spot, but volume does not lie and volume leads price.

Is it difficult to expect (measure) this relationship to hold true during opex and rollover?
I dont deny that down move could still occur this week and next, all april, etc.
I obviously havent studied volume nor do i incorporate it into my trading as you do, but i would like to learn more, so is there a primer for this? Is the general expectation: increased volume = the move is real in that direction (dont go counter?). I notice that on stocks at least, but its usually like 5-10x daily vol.
One last question (Sorry) As you said the last 3 day rally had decreasing volume, i would expect that to mean less players interested to participate at these prices... but couldnt price could continue to rise to an area where volume came in (ES 4500)?, and could that not lead to more upside (breakout etc)?

 

[Buy1Sell2]

Is it difficult to expect (measure) this relationship to hold true during opex and rollover?
I dont deny that down move could still occur this week and next, all april, etc.
I obviously havent studied volume nor do i incorporate it into my trading as you do, but i would like to learn more, so is there a primer for this? Is the general expectation: increased volume = the move is real in that direction (dont go counter?). I notice that on stocks at least, but its usually like 5-10x daily vol.
One last question (Sorry) As you said the last 3 day rally had decreasing volume, i would expect that to mean less players interested to participate at these prices... but couldnt price could continue to rise to an area where volume came in (ES 4500)?, and could that not lead to more upside (breakout etc)?

It seems to me that price can rise or decline on little, or virtually, no volume. I don't look at volume as it adds one more layer of info that can be interpreted incorrectly.