Today's stats:
Volume = 167,461 (Z2 contract (Dec))
Avg 30 Day Volume = 144, 473
Today's Volume Point of Control (VPOC) = 3835.25
4 Session VPOC = 2850
Important Reference Points:
1. Weekly High = 2859.25
2. 3-day regression indicator level = 2856
3. August Monthly High = 2802
4. Quarterly High = 2790
5. STP Placed = 2865
Today's 'profile' in the NQ (Nasdaq mini future) Index would not be characterized as an overall 'weak' day; trading session posted an 'Narrow Range' day -- generally, on transitional days we like to see evidence of heavier liquidation from longs and 'fresh' short selling -- giving a 'wider' profile or elongated profile, reflecting the index ATR, accompanied by heavier volume. Today the market traded poorly from the short side -- Notice in the image above on the 15min level how the market failed to sell as per the 'squat' nature of the auctions profile. Nor did new longs come into the market as per the weak blow off 'short' covering rally at the end of the day as the market would not trade lower. The long side was there supporting the index at 2830 level all day. The multi-week structure in the index has some weak spots embedded as we look down in price on the chart above: reference the 'Single Print' levels. These were established on FOMC day as the market ran-up. These levels 'could' fill in the coming days if there is to be continued 'downside' pressure. These levels sit nicely above August Monthly High level - 2802 - which should act as support, followed by the 2790 Quarterly High. These levels establish expectancy for the trade.
Time is the most important factor associated with this 'short' trade. is the market ready to rotate on an intermediate level? I have no idea - but my hunch is probably still too early. I think the Vol picks up here and the market grinds sideways until Oct. The current weekly up-trend is in its 79th day today and will soon be marking 4 months in duration uninterrupted Oct 1. I got the feeling last week that the market was getting tired in the current trend. The price reached a crescendo development point at the 2850 level and just couldn't find any buyers -- I think the shorts were reluctant to press it either. I could sense, last week, that the market may be overdue for a fast liquidation. And that's where I'm playing here. The close on Friday was an indication the market was going to open up weak this week, as it did given the late day rejection outside the previous weekly high -- to prevent the weekly trend from continuing.
My STP sits above the weekly high and 3 day regression at 2865. This trade is not going to be easy in either direction at this level. You generally want to stay with the trend, but the odds are starting to move in favor of the shorts. We need to closely watch the leaders in the Index -- AAPL, GOOG. GOOG closed today at a new all time high 749.38 above its 2008 weekly high. AAPL is looking toppy, but could easily continue higher from here. Today AAPL found support at the 680 Monthly High and generating a SE = 689.88. I would not be selling the market until price finds its way below 680 level. Once that breaks AAPL the 'drop zone' opens up to very strong support at 621 - see below.
