I just came back from a conference in Boston on new advances in psychology. It’s was very inspiring. I learned a lot of new things in the field that are applicable to our trading. I’ll write on some of these in the near future.
We had another day of rally yesterday in the S&P e-Mini futures (ES). We see very good price movement, reaching new highs on the year. Note, however, the volume. On this rally, at least as compared to the March 13 rally (which I labeled as A), the volume is quite a bit less. We didn’t quite meet that standard.
This doesn’t mean that it is time to load up on short positions. I wouldn’t be thinking that at all. Given the history of this market, it likely has more upside to go over time and when it does get ready to retreat, we will likely see a protracted process of distribution.
I added a 45,000 tick chart. This also shows less volume on the up waves. When we do see significant supply enter, this will be the chart that shows distribution coming in first.
Short term, however, I would expect a small pullback. It would not be surprising to see the market test test into yesterday’s range. We might expect that pullback to run down to about 1405 to 1400. Watch for some selling in the morning session and, if we find a level that the market holds, the potential for a rally in the afternoon.
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