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Assessments / Blog
ES #F Supply increased, 3-Day turning bearish?
The 3-day and daily charts above show our SUPPLY and DEMAND Dashboard and BXB (Bar by Bar) Signals.
Readings are based on Supply and Demand and Volume internal data of the total market. It is updated in real time during the regular trading session of the NY Stock exchange 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, the “footprints” of the “Big Boys” or “Smart Money”.
Fresh concerns from Italy made an impact on the markets Yesterday. The sell-off in the ES closed below the important 2700.50 level and the 3-day chart shown above next to the daily chart has turned bearish. Based on the readings on the 3-day chart we view the immediate term as bearish, until a close above and away from the 2700.50 level occurs.
Daily Signals May the 29th
The Supply and Demand Reading (1st row) came it at -7.1 with Supply dominating and strengthened compared to the previous day.
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) was above 100% and is bearish. The change in average Volatility from the previous day was negative 38 (Supply strengthening) as shown on the right of Sup/Dem Dashboard.
We had no signal on the signals board (1st row).
Daily Volatility direction (2nd row) was Down (maroon down triangle). The change in daily Volatility from the previous day was negative 41 (Supply strengthened) shown on the right of BXB Dashboard.
The overall NY Stock market traded Higher for the day (blue up triangle in 3rd row).
53% of stocks (4th row) traded above there VWAP (Volume Weighted Average Price) compared to the previous day’s 52%, a neutral sign for the markets.
Supply dominated Yesterday as fresh concerns over Italy surfaced and the ES lost 25.50-points. The immediate term is now viewed as bearish. A rally away from the danger point (2700.50) and close above this level is needed today to prevent more short term weakness.
We still believe the market will go higher in the following 3 to 5 weeks, according to our assessment of our proprietary pattern model, but more short term weakness is a possibility, before another substantial move higher. Our targets to the upside are 2744, 2759.50 and 2802.
More short term weakness is a possibility if the 2700.50 level to the upside is not taken out.
We took one short opportunity during the last trading session on the 26-minute chart below. Entries and exits are shown with arrows:
Strategy is simple, enter when 2 Dashboards align and exit when two opposite triangles on BXB Dashboard appears, shown with arrows on the chart. We do not take trades when the of Supply and Demand Sentiment tool is at or near extremes (over-bought/sold) in the same direction of the possible trade. The last sub window on the chart below shows the Greed / Fear sentiment measurements of Supply and Demand Sentiment tool. Similar to an Oversold / Overbought situation (but without using price related formulas).
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