Thursday, May 28, 2009

Identifying a Short-Term Market Transition


Per the recent Twitter post, note how the test of the ES morning lows above was accompanied by reduced volume (blue arrow) and non-confirmations from the Russell and NASDAQ indexes, as well as many sectors (such as financial stocks). We also saw a nice non-confirmation by the NYSE TICK, as the -1000 area readings could not force the market lower. That led to short covering and then increased buying. Readers will recognize this as the "transition pattern" that I've emphasized in recent posts.
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4 comments:

GS751 said...

I really enjoy your posts about different setups for market moves.

meques said...

on ES chart it was within 1 tick to bullish divergence which i was waiting for.

KL said...

Brett, really like your work. But the volume is always higher during the first half hour and declines after that, so this time I don't think the volume could be used as an indicator showing declining selling pressure.

meques said...

will keep in mind +&- > 800 at first half hour means choppy day.