Thursday 15 May 2008

TRIN Oscillator Becoming Over-Bought

Looks like last Friday's post about professional accumulation was on the money. This week's action has lifted the Emini from 1,389 to 1,425.

Emini TRIN Divergence Image

TRIN Bullish Divergence Pattern (Emini daily)

The 1,425 level has provided resistance 3 times in the last 2 weeks and there are bound to be a "bucket-load" of stops sitting between 1,425 and 1,435. This is way too tempting for the Professionals - if we start higher on Friday morning it will cause a chain reaction catapulting the Emini higher.

What we do not know is whether these higher levels will be supported or whether this will just be exhaustion volume followed by a collapse in the Emini shortly after.

Notice on the chart above how the Better TRIN indicator had a Bullish Divergence warning signal that caught the low of this last move (Friday) beautifully.

Emini TRIN Oscillator Image

TRIN, Put Call Ratio and Smart Money Oscillators (Emini daily)

My swing trading oscillators (TRIN, Put Call Ratio and Smart Money) are all reaching over-bought. So it might be time to start thinking about taking profits.

I'm not a big fan of seasonals but typically the Emini peaks in mid-May and then trends down for the rest of the month. We could be seeing this pattern setting up:

  • Stops hit on Friday and short covering causing large volume (exhaustion) move up
  • Non-Professionals decide over the weekend to buy on Monday morning
  • Professionals take advantage of this buying on Monday to take profits and go short

This scenario would fit nicely with the seasonal pattern and my swing trading oscillators. We'll just have to wait and see.

Emini TRIN System Image

TRIN Systems (Emini daily)

Lastly, for those who follow my Better TRIN Systems, the chart above shows the activity over the last 3 weeks. The systems continue to make new equity highs but there are, of course, losing trades along the way.

The chart above shows such a cluster of Short signals that didn't work out. They were looking good until the large range up move we had on 1 May. Since then the Systems have caught a couple of nice moves and have been Long since last week.

Note: Winning trades = Blue dotted lines; Losing trades = Red dotted lines.

Good luck with your Emini trading.

Like this article? Sign up for Free Email Updates or subscribe to the RSS Feed.


Filed Under TRIN Indicator

Friday 9 May 2008

Volume Patterns Suggest Professional Accumulation

Volume pattern discussion today. I've been bullish on the Emini since the end of March. But the Emini's large drop with large volume on Wednesday made it look like this leg of the uptrend might be over. Since Wednesday though the volume patterns suggest the Emini might go higher.

Emini Volume Pattern Image

Volume Patterns (Emini daily)

Large volume down days, like Wednesday, are scary. But maybe that's what the Professionals want you to think. Maybe they wanted to scare you out of your long positions and go short?

If the top was in and the market was going down, why on Thursday did we break Wednesday's low by only 1.25 points? The volume was lower too, showing almost no follow through.

Then on Friday we had a gap open below Thursday's low - again, maybe designed to scare the public out of their long positions? In the end Friday closed up, on low volume and low range - a classic high volume churn and "No Supply" volume pattern.

My best guess is that professional accumulation has been taking place over the last 3 days and the uptrend will resume this week. My only concern is the chart below.

Emini Weekly Hilbert Sine Wave Image

Hilbert Sine Wave (Emini weekly)

This chart shows a cross on the weekly Hilbert Sine Wave and we are approaching a cyclical top. Confirmation happens when the low of the previous week is taken out - and we came within 0.75 points of this on Friday.

The Hilbert Sine Wave can signal early and that's what I'm guessing in this case. In addition to the volume patterns we've also got possible bullish divergences setting up on my swing trading oscillators - TRIN and Put Call Ratio.

Monday and Tuesday's Emini trading will give us more clues. But the volume patterns suggest to me we're heading higher. Good luck with your Emini trading.

Like this article? Sign up for Free Email Updates or subscribe to the RSS Feed.


Filed Under Volume Patterns

Saturday 3 May 2008

Commitment of Traders Still Bullish

Commitment of Traders latest charts.

Commitment of Traders Image

Commitment of Traders: Professionals +1.9% (long)

The professionals (large SP contract) reduced their long positions marginally last week. Their exposure decreased from 2.2% to 1.9% of total open interest.

Commitment of Traders Oscillator Image

Commitment of Traders: Oscillator +81

The Commitment of Traders Oscillator inched up to +81 last week. The week before it was at +80. We're close to over-bought but the oscillator is yet to roll over.

I remain bullish medium term, especially since we broke 1,400 and the professionals are still net long. The danger now is that we're in an uptrend and the Commitment of Traders Oscillator will signal short too early.

My best guess is that the Emini is likely to keep pushing higher, maybe erratically. But a low range weekly bar will indicate professional profit taking and a likely top for this cycle.

The Commitment of Traders Oscillator is a longer term Emini indicator and designed to highlight broad trends. The Commitment of Traders data is collected weekly after the close on Tuesday and the Commitment of Traders Report is published after the close on Friday. Follow this link for a full explanation of this Commitment of Traders analysis.

Like this article? Sign up for Free Email Updates or subscribe to the RSS Feed.


Filed Under Commitment of Traders

Previous entries

Popular Emini Trading Articles

Free Emini Trading Report

Emini Trading Report
Emini Trading - Free Report Coming Soon!

Subscribe to Emini-Watch