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My price and volume analysis of ES (hopefully daily)
- Thread starter wiesman02
- Start date
Hope you read my pre-market analysis as it was spot on. And I really hope u didn't go long on that push up. Oh well.
Todays daily chart was a classic upthrust on no demand b/c we hit new highs and prices weren't supported at that level. Thus, big money is not interested. Tomorrow, like all no demand upthrust days after a new high is reached, we wait for confirmation of supply to come into the market, before the real pain occurs. I would have preferred to see more volume come into the market today as that would have made this no demand upthrust a tid bit more reliable of a signal. Therefore, its prudent to wait for confirmation on this.
1) Hammer. prices unsppported at the 1111 area. Low volume thrust here. I consider 100k opening vol to be low. There is a lack of demand, but we dont see overwhelming supply yet.
2) Ahh, up candle finishing almost 50% off its highs. This is the result of candle #1. We see candle #1 screaming short to the untrained eye, but it was clearly cautionary. Candle 2 proves it. We have decreasing volume, which tells us that supply is ACTUALLY decreasing here and there's a slight increase in demand.
3) Very high spread up candle finishing, eh, 1 point off its highs on a 50k spike in volume. If you've been following my analysis these past few days, distribution is occuring here. big money is unloading their long positions to the herd. If you bought this candle, perhaps u know why prices went down now. SUpply is coming into the market.
4) Down candle following a distributive, wide spread up candle without new highs confirms our suspicions about candle #3. Price action is weak. big money continues unloading.
5) Down candle finishing off its lows on decreasing volume. Demand is coming into the market.
6) narrow ranged down candle on more decreasing volume. This tells us supply is drying up, demand is unchanged. Distribution is ending. We are hesitant about this move down being a pullback as for the reasons mentioned earlier. If you take this candle to be a good riskier setup for a long entry, well, now u know why its risky. While narrow ranged down candles during a pullback in an uptrend on low vol are usually signals of a rally, this is a prime example why you can't JUST take candle formations at face value. There is much more than just reading a candle.
7) Distribution has ended. Panic sell candle. Vol has increased, many stops from early in the morning are being hit right now. Those who went long when we broke new yearly highs on S & P are exiting now. Big money is seeing opportunity and are adding to their short positions. Candle ends at the lows on increasing volume. Lower prices expected.
8) Reversal formation candle except it doesnt fool me. Remember, we want to see a larger spike in vol for this to be reliable. The spike in vol is attributed to more accumulation taking place so supply gets swamped. This leads to the other point in which the tail is not long enough. We needed a tad bit more supply, and then have a huge amount of accumulation thrown in to 'shock' the market. This doesn't happen. Instead, the candle is a 'test' candle. A test meaning testing for further movement down.
9) No demand thrust up.
10) Down candle on more decreasing volume. Accumulation is just about over with.
11) Another down candle, with a slight no demand tail. Dont go call it an upthrust because it didnt break the highs of the previous 2 tails. Nonetheless, it is more confirmation that accumulation is about done, and this move down might be restarting.
12) Down candle on a huge spike in volume with prices finishing off the lows. Remember in my previous post 1102-1104 area should be the support / low's of the day. Pretty much spot on. This candle shows large amounts of accumulation coming into the market.
13 + Not gonna go into these candles as it was just chop chop chop the rest of the way. I dont see a point in analyzing them unless you guys want me to.
Todays daily chart was a classic upthrust on no demand b/c we hit new highs and prices weren't supported at that level. Thus, big money is not interested. Tomorrow, like all no demand upthrust days after a new high is reached, we wait for confirmation of supply to come into the market, before the real pain occurs. I would have preferred to see more volume come into the market today as that would have made this no demand upthrust a tid bit more reliable of a signal. Therefore, its prudent to wait for confirmation on this.
1) Hammer. prices unsppported at the 1111 area. Low volume thrust here. I consider 100k opening vol to be low. There is a lack of demand, but we dont see overwhelming supply yet.
2) Ahh, up candle finishing almost 50% off its highs. This is the result of candle #1. We see candle #1 screaming short to the untrained eye, but it was clearly cautionary. Candle 2 proves it. We have decreasing volume, which tells us that supply is ACTUALLY decreasing here and there's a slight increase in demand.
3) Very high spread up candle finishing, eh, 1 point off its highs on a 50k spike in volume. If you've been following my analysis these past few days, distribution is occuring here. big money is unloading their long positions to the herd. If you bought this candle, perhaps u know why prices went down now. SUpply is coming into the market.
4) Down candle following a distributive, wide spread up candle without new highs confirms our suspicions about candle #3. Price action is weak. big money continues unloading.
5) Down candle finishing off its lows on decreasing volume. Demand is coming into the market.
6) narrow ranged down candle on more decreasing volume. This tells us supply is drying up, demand is unchanged. Distribution is ending. We are hesitant about this move down being a pullback as for the reasons mentioned earlier. If you take this candle to be a good riskier setup for a long entry, well, now u know why its risky. While narrow ranged down candles during a pullback in an uptrend on low vol are usually signals of a rally, this is a prime example why you can't JUST take candle formations at face value. There is much more than just reading a candle.
7) Distribution has ended. Panic sell candle. Vol has increased, many stops from early in the morning are being hit right now. Those who went long when we broke new yearly highs on S & P are exiting now. Big money is seeing opportunity and are adding to their short positions. Candle ends at the lows on increasing volume. Lower prices expected.
8) Reversal formation candle except it doesnt fool me. Remember, we want to see a larger spike in vol for this to be reliable. The spike in vol is attributed to more accumulation taking place so supply gets swamped. This leads to the other point in which the tail is not long enough. We needed a tad bit more supply, and then have a huge amount of accumulation thrown in to 'shock' the market. This doesn't happen. Instead, the candle is a 'test' candle. A test meaning testing for further movement down.
9) No demand thrust up.
10) Down candle on more decreasing volume. Accumulation is just about over with.
11) Another down candle, with a slight no demand tail. Dont go call it an upthrust because it didnt break the highs of the previous 2 tails. Nonetheless, it is more confirmation that accumulation is about done, and this move down might be restarting.
12) Down candle on a huge spike in volume with prices finishing off the lows. Remember in my previous post 1102-1104 area should be the support / low's of the day. Pretty much spot on. This candle shows large amounts of accumulation coming into the market.
13 + Not gonna go into these candles as it was just chop chop chop the rest of the way. I dont see a point in analyzing them unless you guys want me to.
Attachments
Herr Wiesman, put me on ignore if I am violating your thread's protocols, but this old grey head needs to be knocked into understanding how you can attribute accumulation and distribution motives to volume in an index future dominated by hedging of positions taken in a multitude of other instruments. It is fairly easy to show day-by-day that the net volume of trades at the bid and at the ask is an insignificant fraction of the total volume traded, and that therefore index futures are not a significant venue for taking positions. Just asking, mind. I, like you, believe fervently in my own ignorance.
Quote from Fleming Snopes:
Herr Wiesman, put me on ignore if I am violating your thread's protocols, but this old grey head needs to be knocked into understanding how you can attribute accumulation and distribution motives to volume in an index future dominated by hedging of positions taken in a multitude of other instruments. It is fairly easy to show day-by-day that the net volume of trades at the bid and at the ask is an insignificant fraction of the total volume traded, and that therefore index futures are not a significant venue for taking positions. Just asking, mind. I, like you, believe fervently in my own ignorance.
I'm sure u already know that big money tends to sell into an up move, and vice versa in a down move. This is an old principle, and no matter how much hedging and non-directional play that occurs, this is an important concept that affects trending and chopping markets.
I completely understand where you're coming from. How can you understand if acc or dist is taking place with the fact that index futures are not JUST traded directional. Well, first of all, index futures are very efficient. They very closely resemble the cash indexes, EVEN with all the hedging and non-directional bullshit thats occuring. And i understand that to some extend, volume can be distorted here due to that. But I do not take that into consideration due to the efficency of the ES and its relation to the S & P
I use the principle that volume leads price. MANY on ET will completely disagree with me, and like u, they think that its impossible to use volume to trade ES. I do not ONLY use volume. Hell, I'm not even telling everyone what my indicators are to buy and sell. No part of my strategy is being used here. I think if you use the principle that distribution occurs in uptrends, and accumulation occurs in downtrends, as long as u know where to look, you can trade the ES. Now these techniques won't predict tops or bottoms, but they help ! Sorry if htat doesnt answer your Q.
Now if I am COMPLETELY off base here, do express your opinion.
Thanks for that educational explanation. No criticism implied, I'm just asking. I have a highly delusional view of the market based on coded visualizations of price and volume behavior at the tick level, analogous to a graphical time and sales. This generally puts me in the "volume is meaningless, if not worse" camp. I find that I trade better when I make no interpretations, seek no reasons, form no opinions, and have no expectations. Trading to me is like loving a difficult woman. When you get some, count your blessings.
FredBloggs
Guest
Quote from Fleming Snopes:
This generally puts me in the "volume is meaningless, if not worse" camp. I find that I trade better when I make no interpretations, seek no reasons, form no opinions, and have no expectations.
each to their own i guess.
if 100,000 contracts trade between 25.00 and 30.00, but only 1000 trade between 40.25 and 45.25, which 5 point range will be more significant?
which 5 tick range will act as support or resistance, and which will attract price?
id be interested in why people think volume is meaningless.
Mr. Bloggs, indeed we do see things differently. I want to enter on low volume and exit on high volume.
Quote from wiesman02:
Tomorrow, like all no demand upthrust days after a new high is reached, we wait for confirmation of supply to come into the market, before the real pain occurs. Therefore, its prudent to wait for confirmation on this.
well, I think we got our confirmation that supply came into the market ! lol. I'm exhausted, i'm taking a nap, and will be back on later for the analysis