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ES #F Down and Up
The daily chart above shows our SUPPLY and DEMAND Dashboard and BXB (Bar by Bar) Signals.
Readings are based on Supply and Demand and Volume obtained from raw internal data of the total market. It is updated in real time during regular trading sessions and does NOT take into account any price indicators or mathematical formulas using price. We do however show the cumulative price change for the trading session and in some instances assess price movement’s relationship to Supply and Demand. It is therefore fair to say that the readings and signals are independent from other popular price indicators and others shown on the chart. The readings are an independent assessment of the one and only measureable fundamental market mover: SUPPLY and DEMAND. It does not matter if price is influenced by a geopolitical event, seasonality, fundamental economic data releases or sentiment driven news, etc. It all reflects in Supply and Demand, leaving “footprints” by the “Big Boys” or “Smart Money”.
The market opened with a bearish move down of 16.75-points Yesterday and at about 13h24 (ET) reversed with a 27.25-point advance, ending the session with a net 5.25-point gain. We warned about Volatile conditions in earnings season and Yesterday was a good example of the sudden price swings that can happen. Price did not close below the Mean (Regression) and no Selling pressure developed during Yesterday’s trading session.
Supply dominated Yesterday’s first half of trading session and temporarily took out the Mean at 2635.50, but ended up closing above the Mean at 2652.25. The current up wave volume (still in progress) is the lowest (4.32m) since December the 4th and should price move down further to complete the upswing, it can still signal No demand. Price did not move far enough to the down side to end the upswing. As explained below we saw an anomaly in the market Yesterday, which should alert traders to be extremely cautious in today’s trading decisions.
The Supply and Demand Reading (1st row) was -1.5 Yesterday which indicates Supply was dominating.
Supply and Demand Direction (3nd row) was to the downside (red down triangle), indicating downwards direction, with substantial strength.
Average Supply and Demand Volatility (4th row) went above 100% and is bearish. The change in average Volatility from the previous day was negative -26 (bearish) as shown on the right of Sup/Dem Dashboard.
We have an unbalanced market warning signal on the signals board (1st row).
Daily Volatility direction (2nd row) was Up (blue up triangle). The change in daily Volatility from the previous day was positive 77 (bullish) shown on the right of BXB Dashboard.
The NY Stock market traded Up for the day (blue up triangle in 3rd row).
76% of stocks (4th row) traded above there VWAP (Volume Weighted Average Price) compared to the previous day’s 31%, a positive sign for the markets.
In short we saw Supply dominating for the first half of the trading session Yesterday, before Demand strengthened and a substantial up move developed. What is interesting is that the up move occurred on diminishing Supply and that Demand did not outnumbered Supply at the end of the trading session. Although price did not close below the Mean, the Supply / Demand reading was still bearish (-1.5) for the day on a net 5.25-point gain. This is an anomaly as indicated by the Unbalanced market warning signal. With the mixed signals our assessment is that the Bulls did not do enough Yesterday to be convinced of any major near term advances, and we still favour the Bears on a balance of probabilities with the above readings and signals.
We are still in Buying pressure territory, but only just. For short entries (not for the short term) the Simplified Volume Oscillator must enter the Selling pressure territory. Earnings season can lead to volatile conditions, so be cautious. If the market trade down in the short to medium term, the line in the sand for the bulls will be the February 9th low at 2529. A close below this level will Technically damage the bull market.
There were 2 opportunities during the trading session Yesterday on the 26-minute chart below:
Strategy is simple, enter when 2 Dashboards align and exit when two opposite triangles on BXB Dashboard appears. First entry was short (magenta down arrow) and the second entry was long (green up arrow). The second-long entry was a riskier trade as the two Dashboards did not align, but Supply was weakening and Buying pressure developed and with the 2 blue Up triangles aligning with Buying pressure and the Divergence in Supply / Demand, we took the entry long and it worked well!
The last sub window on the chart shows the Greed / Fear sentiment measurements of Supply and Demand. Similar to an Oversold / Overbought situation (but without using price related formulas). Interesting to see the Divergence in Supply and Demand, where price went down on diminishing Supply before it reversed. What is more interesting is that the second half up move happened on diminishing Supply and that Demand never outnumbered Supply. This is an anomaly and extreme caution should be exercised in today’s trading.
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