Not much to say on this one that wasn’t already discussed live in the room by members today. Before we get into the specifics one thing to point out is note the wide highlight in dark green in the stats. The main message is to note when the deltas are strong and one way regardless of whether its an up or down rotation around key areas. Today obviously whether buying into new highs or buying into pullbacks the dominant aggressors were….buyers.
There were exactly two key structures overhead coming into the morning and they were both very obvious and major – the 89’s and the 94’s as marked. The 89’s regardless of being quite major broke easily on the first push almost uncontested and this was followed by a series of pullback failures in blue and green with hard rejection of the lows and very strong divergent delta stats led by size. Any of those spots would have been music to the eyes of continuation bulls today. Obviously bears looking to incentive fade had cause to stalk with the one way run up in Globex but note that the upward pushes all showed unremarkable volume and definitely not the kind of stats you’d want to see. The upside pressure was very evident so I don’t see much that would have trapped many bears trying to fade the 89’s action.
The next structure above was the 94’s of course but due to the depth of the pullbacks and depending on where you got in, even the same interim high post rotations could have been 2-3 handles. Because of that I can’t imagine not scaling at least some into the action in purple for fear of maybe a headfake after all the shorts that wanted to cover had done so. Remember, we never know what is really going to happen next. But for those still holding we subsequently tested the 94’s and again the case price was all but uncontested, easily pushing past and electing stops behind in pink. That slowed the bulls down at least enough to rotate and provided nice liquidity to scale into. Can I see incentive fading at least for a scalp on the action in pink? Absolutely. But unfortunately if you didn’t cover right out it was a scratch at best for most. No second push failure for the short swingers there to get in trouble with though thankfully.
From there we were trading ‘into air’ as I call it, with no prior market structure to lean on. You each need to decide whether your own models will permit this at all of course. But for those who do most will simply use the PA and flow components alone obviously. By any measure the action in the push in red was beyond remarkable and I can’t imagine scaling there. Behind the all time high there were bound to be a ton of longer term stops and position adjustment instructions and we definitely are seeing that in the flow in red. But again with the stats being so bullish, especially with the absence of short finish off the highs and it being such a major structure, I can’t imagine fading there to be honest. Almost too much going on making you fearful to get involved. But in any case there is much to consider on this one today. It is a rare but commonly reoccurring day type the one way big momentum action type day. If you can learn to recognize them when they are happening, you may be able to find some edge over groups of them in the future when they come up…
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