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Learning to trade the ES using volume profiling
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Learning to trade the ES using volume profiling

  #481 (permalink)
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7-11 pre-market

Economic data: claims

ON Profile: Very distinct p-shaped profile. Large 19.25 pt range on pretty average volume of 260k. No selling interest after the close at all. For the moment, the hi is 1667.5 which we have as a double top from 5-20 and 5-28. This hi itself is a double top and looks pretty poor. Vpoc currently at 1664.75.

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ES is set to open with a large 15 pt gap higher and only 15 pts below all time hi's. After selling off 100 pts in 4 days the market has in two weeks time recovered all those losses and then some. It rallied 50 pts, balanced for 5 days, broke higher and rallied another 40 pts, balanced for 2 days and now we are breaking higher again. Clearly bulls in total control. Is there any reason to be a seller up here? I can three selling set ups today. First would be if ES opens OD down. Second would be if ES opens and pushes higher and fails/1 or 2 ticks the ONHI. Third would be a short off the nvpoc at 1671.25 and maybe you can get a nice little pullback. Otherwise the focus should be squarely on the long side. But where? I think the best place to get long would be around 1649.5 BAH but thats 15 pts lower. 1658 CHVN might be attractive especially considering it did give a little bit of rotation relief on the way up. 1655 CLVN is an option too but we blew right through it on the way up, no reason we can't blow right through it on way down. I'm guessing most likely this will just make you take a long where you don't want to and deal with it. All time frames are now very bullish.

Levels Above: 1667.5 ONHI**, 1671.25 nvpoc*, 1675.25 CHVN, 1679.75 all time hi

Levels below: 1658 CHVN, 1655 CLVN, 1649.5 breakout level***, 1644.75 nvpoc, 1641.5 BAL

Hypo#1- ES opens OAOR and responsive sellers lay into it but lose interest around 1658 and bulls grind it higher up to 1671/75.

Hypo#2- ES opens OAOR and bulls push but fail at ONHI/ 1671 nvpoc then sellers step in and push down to 1658.

Hypo#3- ES opens OD (up or down). Get on board!

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  #482 (permalink)
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7-11 recap

No trades today

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Recap
ES opened OAOR and spent the majority of the day in a 6 pt range before breaking higher into the close. Value and vpoc shifted completely higher. Price closed just off the hi and above value on light volume of about 1.1 mill. The large gap up held almost in its entirety. Profile shape is kind of a double distribution. No sign of sellers yet and with the all time hi only 9 pts higher it *seems* a given that we take it out tomorrow or next week.

I did not trades today and it sucks. I had my finger on the trigger ready to lay off a short on the open if it stalled at the ONHI or only 1 or 2 ticked it and instead it stopped 2 ticks short and left me watch it go down. I need to be more fluid and its always a problem for me when the market stops just short of a level. I knew the long would be hard today and it did not disappoint. I was hoping for another trip down to IBLO to get long but it stalled at 1663 and again left me watching. Finally, I debated a short at 1671.25 but by the time it finally got there it was 15 min before the cash close so I let it be. So I am real frustrated as there have been 2 days this week with no trades. There have been tradable moves this week and I have missed them. I need to get on them... Tomorrow is another day.

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  #483 (permalink)
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Profiler View Post
No trades today
...So I am real frustrated as there have been 2 days this week with no trades. There have been tradable moves this week and I have missed them. I need to get on them... Tomorrow is another day.

There is a lesson here in what you wrote. At the level you are presently, some days need to be skipped and i am sure you knew it before the day even had started. When this cccurs, trust your instinct and close the computer and take a day off. I would suggest you take a note of the number of times it occurs in a year.

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  #484 (permalink)
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7-12 pre-market

Economic data: PPI, michigan

ON Profile: Tight 6.5 pt range on very light volume of 144k so far. The low is just below that distinct LVN from yesterday and the hi is a pt above pHi. Vpoc at 1668.5 and overall profile shape is kind of a double distribution, kind of balanced.

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ES spent the night balancing in yesterday's upper distribution which is interesting considering that yesterdays vpoc was very prominent so I thought that a re-visit would make sense but the fact it did not seems to be another clue as to the strength of this market. Volume has been very light this week and range has been small and today is a friday in the middle of summer and ES is set to open OAIR (at least its above value!). What can we realistically expect for today? This seems like a perfect set up for a slow death grind up to all time hi's with maybe a chance of a stall out and profit taking kicking in at the close. All time frames are extremely bullish. All time hi at 1679.75 is staring everyone in the eye.

Levels Above: 1671.75/72.75 pHi/ONHI*, 1675 CHVN*, 1679.75 all time hi***

Levels Below: 1664.5 nvpoc*, 1658.25 CHVN**, 1655 CLVN, 1650 CHVN/BAH***

Hypo#1- ES opens OAIR above value and sells off to 1664.5 and then starts death grind higher up to 1675/1679.75.

Hypo#2- ES opens OAIR and pushes up to 1672 and fails then auctions down to 1664.5 and possibly lower before buyers step in.

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  #485 (permalink)
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7-12 trades and recap

1. Long 1669 vwap after ES made low of 1667.5 coincident with LVN from yesterday then bounced and pulled back again to low but stopped 1 tick short so I went long. Aggressive location and not feeling very confident about it but this happened yesterday and it was the right play so maybe this is the right play today. Stop is below current LOD. Initially put 1668.5 bid in and would have been filled but got scared. First scale after 18 mins and 1.25 MA. 49 minutes in it has gone and stopped 1 tick short of my second scale which is just above the ONHI and now pulled back inside the IB by a few ticks...not sure what to do with this. Hold target at original exit, stop at breakeven? Keep stop below the lo? Now 1:17 into the trade and it is still churning inside the IB and I have decided to just keep the stop where it is despite the ominous context. Mostly this is just to enforce the plan of letting a trade play out. Stopped on last one after 2:37 after touching my exit 5 times I bailed despite it printing so weakly.

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Recap
ES opened OAIR above value and established higher value and vpoc on the day, albeit incrementally. Price closed unch on very light volume of only 930k. The daily candle is another doji. Sellers are just awol and I fully expect the all time hi to get taken out next week. Maybe above that level or around 1700 will be enough to entice some real selling. Today's low is atrocious, I cant believe it held.

I am totally content with my trade today. I put on a good trade that would have been excellent had I stayed with my original entry. It was not an easy trade to put on either as I really wanted a visit to the 1664.5 nvpoc first. I got really unlucky with puking the exact low and turning a +300 day into a scratch but so be it, that will happen again. All in all my first week of trading 2 lots went ok. I pussed out on some trades, I took some bad ones and I made a couple good ones. Next week will be better!

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  #486 (permalink)
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I was short 69.25 at about 10:30 CT. I truly believed the market was going to fall out of bed there at 1667...fact is I had moved stop to 68.75 and just kept holding through everything. I certainly would not blame you for bailing on longs at that level...I think market would have gone a lot lower, if it could have got through there.

May(be) you and I both should look at time stops <smile>. In my case, after holding for an hour, it probably should have been clear it wasn't going lower.

Good trading
Ddawg


Last edited by Ddawg; July 13th, 2013 at 06:51 PM. Reason: spelling
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  #487 (permalink)
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Ddawg View Post
May(be) you and I both should look at time stops <smile>. In my case, after holding for an hour, it probably should have been clear it wasn't going lower.

Good trading
Ddawg

Yeah I don't know if time stops make any sense. I dont know why you put your trade on but i can see a good reason for being short yesterday after the rejection from the ONHI and I think I had pretty good reasons to still hang on to my long and we both endured some serious chop but why should that be a reason to take the trade off? I think a good trade has a defined level that if hit you know you are wrong. Ideally you put on a trade and it runs away instantly but sometimes you get situations like yesterday. I still cant believe that low held btw...

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  #488 (permalink)
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Yeah I don't know if time stops make any sense. I dont know why you put your trade on but i can see a good reason for being short yesterday after the rejection from the ONHI and I think I had pretty good reasons to still hang on to my long and we both endured some serious chop but why should that be a reason to take the trade off? I think a good trade has a defined level that if hit you know you are wrong. Ideally you put on a trade and it runs away instantly but sometimes you get situations like yesterday. I still cant believe that low held btw...

You know, this is something that drives me crazy...I mean you hang on for dear life one time...and make 25 cents, next time you take a couple handles profit, and it goes 20 handles further! I don't know about time stops either. Perhaps something to study further.

My reasoning for short was a break of the downward wedge/support line at 69.50(5 min. chart) along with a couple other confirmations.

You would have been right in the long run, unfortunately you gotta have a stop somewhere.

Good Trading
Ddawg

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  #489 (permalink)
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Today's low is atrocious, I cant believe it held.

Ditto -- I bought 67.50 around 12:15 ET. If you look at how BA was pulling down the dow at that time, yet how the S&P just would NOT break down, then it's clear ES wanted to try for a new high. Then there was the France downgrade and I puked at the same price, expecting at least a new low by 1 tick. But in the next couple of minutes it became again clear that ES was just too well bid to not get back in so I did, again at the same price.

In short, look at how heavy the dow was because of BA, and how a downgrade of France could not break it, and that can give a VERY strong conviction to get in and let it see what it can do. Sometimes it's what doesn't happen that gives the best indication of market sentiment.

While you are seeing a "poor low" form (and it technically was a poor low), in fact it was simply so well bid that it was a very strong buy. I don't know if you watch the DOM or not, but they just kept on reloading in the 67s. 67 was, as you show, an excellent place to buy structurally, and by that point the VPOC for two days had already shifted higher to 70, so market was accepting higher. When you see that, no reason to not give it a try, if it happens to be in accordance with your overall view and plan.

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  #490 (permalink)
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Yes I think the DOM showed several price levels with like 40K contracts, and I kept thinking...if they can push this a little lower, these guys are gonna bail, and the market is going down. Just didn't happen.

Thanks for the analysis on BA and the Dow. I knew something had hit the Dow really hard...but wasn't sure what it meant. That is one reason I just kept holding. Interesting how these things work together. I think that is what I find so fascinating about markets/trading.

Ddawg

After typing that I realized you could reverse my idea about size on the DOM and say it was actually a sign of support/strength...so thanks again. Think you opened my eyes a little bit on that.

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