ES Journal Archive (2009 - 2010)

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Quote from Lawrence Chan:

NQ is THE reason why ES is selling.

So, its target zone for the drop should be watched closely.
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IMO, the line in the sand for NQ is 1285. If it can stay below we might see some new lows and a gap fill.

Same with ES 818.
 
Quote from Lawrence Chan:

Looking at the price, most would think that we are overbought.

But, it is a very oversold mkt by all other measures.

The accumulated shorts from the past 3 days will have to be prepared for the ruling of uptick rule by tomorrow ...
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Lawrence, can you elaborate a bit about "all other measures" that show the market is very oversold? Thanks.
 
Quote from wohc:

Lawrence, can you elaborate a bit about "all other measures" that show the market is very oversold? Thanks.
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I don't mean to speak for LC but "OVERSOLD"?! Why, we're only down by 12 points for the day and only down a meager 30 points from the high of this ongoing BS saga which everyone thinks is for real.
 
Quote from wohc:

Lawrence, can you elaborate a bit about "all other measures" that show the market is very oversold? Thanks.
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Different time frames, Daily starting to look toppy, though if you were to look at the weekly & monthly charts you would be seeing an oversold market, I guess :)
 
A simple example here on toys as it is the only game in town. And that the # of toys at the moment is limited.

1. buyers rush in to buy at $1, $2, $3, $4 all the way up

2. original owners of the toys sold most of their inventories to the buyers.

3. now at $10, it is overbought - because most of the toys are now bought at or close to $10

4. BUT, the original owners of these toys have tons of cash, they need inventories

5. So speculators keep shorting at $10, 9.5, 9, 8.5 and all of a sudden the price no longer drop at $8

6. why? all speculators are short, and inventory holders do not care if those toys going zero next day. thus they do not panic and they are not selling

7. The mkt is oversold by all measures except price. =)

That is what happened to the stock mkt since 800 was printed.

Until the inventoy holders find the mkt priced at a good deal for them to unload, short squeeze continue.
 
Quote from saliva:

I don't mean to speak for LC but "OVERSOLD"?! Why, we're only down by 12 points for the day and only down a meager 30 points from the high of this ongoing BS saga which everyone thinks is for real.
More...

Extreme down tick counts across the board with minimal price drop is a sign of buyers are paying up.

That continued for 3 days. For a real overbought mkt, you should have seen a drop of 50+ pts ES.

When all sellers have sold ...
 
Quote from Lawrence Chan:

A simple example here on toys as it is the only game in town. And that the # of toys at the moment is limited.

1. buyers rush in to buy at $1, $2, $3, $4 all the way up

2. original owners of the toys sold most of their inventories to the buyers.

3. now at $10, it is overbought - because most of the toys are now bought at or close to $10

4. BUT, the original owners of these toys have tons of cash, they need inventories

5. So speculators keep shorting at $10, 9.5, 9, 8.5 and all of a sudden the price no longer drop at $8

6. why? all speculators are short, and inventory holders do not care if those toys going zero next day. thus they do not panic and they are not selling

7. The mkt is oversold by all measures except price. =)

That is what happened to the stock mkt since 800 was printed.

Until the inventoy holders find the mkt priced at a good deal for them to unload, short squeeze continue.
More...
Nice. Thanks.
 
Quote from Lawrence Chan:

Extreme down tick counts across the board with minimal price drop is a sign of buyers are paying up.

That continued for 3 days. For a real overbought mkt, you should have seen a drop of 50+ pts ES.

When all sellers have sold ...
More...

Thanks for a great example LC.

ImPO Daily chart is not quite ready for a 50+ point drop, histo sorta starting to curve downwards putting in a divergence, though I sense, especially after your explanation, we just might see price heading towards 850-875 SPX before we see that expected correction or whatever one wants to call it :)
 
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