The 1,040 Support level held on the Emini today. We rallied 20 points but on very low volume. Prior to today we had 3 high volume down days – Professional accumulation? Obviously the 1,075 Resistance level above is critical going forward.

Volume Indicator – Low Volume Up Bar (Emini daily)

The obvious question is: "How long is that rally going to run?" The answer is: "Trend moves always last longer than you expect."

I rarely post charts of individual stocks. But the long term (monthly) charts are suggesting that a cyclical top is approaching, but not until possibly the end of October. I'll be looking at these charts at the end of this month to see how they have progressed.

Long Term Cycle (AAPL monthly)

Long Term Cycle (GS monthly)

Long Term Cycle (F monthly)

Long Term Cycle (YHOO monthly)

This post is only for NinjaTrader users who want to live on the "bleeding" edge.

One of the most frequent requests I get is for a version of Better Volume for the NinjaTrader platform. NinjaTrader is a great platform but sadly volume traded at the bid or the ask is not readily available, as it is in TradeStation. Anyway, Bruce (my Ninja coding guy) has programmed a workaround that is very elegant.

If you're interested there's a link at the bottom of this post, but first some caveats:

• Better Volume has been coded as a Strategy within NinjaTrader. It plots an Indicator but you actually add a Strategy to your chart – this allows the volume traded at the bid and the ask to be calculated.
   
• The indicator loads Tick data into memory in order to calculate the volume traded at the bid and the ask. The drawback to this is that the indicator will load a maximum of 5 to 10 days worth of Tick data.
   
• No two data feeds are ever the same – I know they should be, but real life isn't like that. As a consequence, you will never get the Better Volume indicators to match up exactly using different data feeds or platforms. Having said that though, Better Volume will get the big picture right between platforms and help you analyze the volume traded.
   
• If you use the Interactive Brokers (IB) data feed for NinjaTrader this indicator will not work properly. The IB data feed is not complete and only reports about one third of all Ticks. This works fine for minute or hourly bars but is worthless for Tick charts or calculating volume traded at the bid or the ask. I'd recommend upgrading up to the Zen-Fire or eSignal data feeds.
   
• The Better Volume indicators for TradeStation are free. However, there is a charge for the NinjaTrader versions. This is to cover the costs I have incurred in having the indicators translated. I might change this in the future.

As you can tell, I'm quite apprehensive about releasing these indicators but so many subscribers have asked for them. I'd prefer them to be more robust and able to duplicate what I see on my TradeStation charts. Having said that, if you're interested, here's a link to the Better Volume Indicator for NinjaTrader.

If you'd like to compare the Better Volume plots you get on your NinjaTrader charts, here are 2 charts from Tuesday 25 August 2009:

Better Volume Indicators – 25 August 2009 (Emini 5 min)

Better Volume Indicators – 25 August 2009 (Emini 699 tick)

Here's a link to the Better Volume Indicator for NinjaTrader.

The Emini closed up 2.00 points on Friday on very low volume – only 1.3 million contracts traded. It was also a low range (high to low) bar that signaled High Volume Churn on the daily chart – a sign that the Professionals are taking profits.

It seems that no one wants to be first to push this market through the 950 level. On the other side, no one is in a hurry to Short either.

Me, I'm still waiting for the cycle turn (top) on the 135 minute chart, shown below. And once again I find myself sticking my neck out – I think we're heading lower and going to fill the 904 to 912 gap.

Volume Indicator – Low Volume Up Bars (Emini 135 min)

On the 135 minute chart above, you can see the Low Volume Up bars (yellow) on Friday – showing weak demand. The last bar on Thursday was a typical profit taking volume pattern – high volume, close in the middle.

Cycle Top Approaching (Emini daily)

In the meantime, we're also getting close to a cycle turn (top) on the Emini daily chart, shown above. We could get cycle turns lining up on both the 135 minute and daily charts – which would signal a powerful move.

TRIN Indicator System Takes Profits (Emini daily)

Last chart just shows the Better TRIN systems took profits and signaled an exit on the Long trade. This ended up being +58 points. That's system trading – close your eyes, disengage brain and follow the signals!

Good luck with your Emini trading next week.

The Emini closed down 4.75 points at 874.25 on Friday. Volume was below average at 1.7 million contracts traded. We also failed to break Wednesday's low of 865.

Trend Line Congestion (Emini 45 min)

We're now entering a congestion zone, as shown on the Trend Line chart above, from which I expect a large range move. But in which direction?

Volume Indicator – Less Selling (Emini 45 min)

Selling volume has been declining since Wednesday and the 865 level has held. The chart above shows the Better Volume indicator with white bars highlighting climax volume down bars.

These climax volume down bars have been getting less powerful since the break on 2 July. So my best guess is that we'll hold 865 and break out to the upside.

This also fits with my swing trading oscillators – but I still believe we're in a down trend and this will just be a retracement before the down trend resumes.

Good luck with your Emini trading.

The Emini's up trend is losing momentum and we could be due for a pullback.

Volume Indicator: High Volume Churn & Stopping Volume (Dow daily)

First a daily chart. Friday was a High Volume Churn and Stopping Volume day – showing that Professionals are taking profits and starting to Short. The chart above is of the Dow, but the same patterns can be seen on the S&P500, NASDAQ and Russell 2000.

Volume Indicator: Declining Momentum (Emini 81 min)

When we drop down to the 81 minute Emini chart (exactly 5 bars per trading day), we can see that there is declining buying momentum. The chart above shows this entire 6 week rally:

• The rally was kicked off by a Volume Climax Up bar (red) at around 680.
• The first leg ended when Professionals started to take profits around 820, with a series of 3 Volume Climax Up bars each on declining volume. However, note that the volume was still well above average (red line).
• This last leg also has a series of 3 Volume Climax Up bars each on declining volume – showing the upside momentum is reducing. However, note that the volume is substantially less than the last sequence and Friday's red bar was well below average volume.

TRIN and TRIN Oscillator (Emini daily)

The TRIN System is now Short and the TRIN is also showing Bearish Divergence. Friday's value on the Better TRIN (adjusted so +ve is buying and vice versa) was -12, showing net selling although the market was up.

Cyclical Top Approaching (Emini 135 min)

Lastly, we're approaching a cyclical top on the Emini 135 minute chart. The first cycle turn after an "End of Trend" warning signal can often be a good reversal entry point. We're now at the second cyclical turn and so over-bought.

I'll update the Commitment of Traders charts tomorrow. They are little changed over the last 2 weeks with Professionals heavily short (-16.8% of total open interest) and the Commitment of Traders Oscillator overbought (+146).

Good luck this week with your Emini trading.

The Better Volume indicator feature article has finally been updated. This has been a long time coming – so my apologies. The article includes a high-definition video plus chart examples and free code. Follow this link to the Better Volume indicator article.

The Emini had a nice trend move this afternoon. The chart below shows the Better Volume indicator on the 699 tick chart. I am most interested in the Low Volume (yellow) and High Volume Churn (blue Paintbar) bars, so I turn off the other bar colors.

Better Volume Indicator (Emini 699 tick)

The cyclical low at 834.50 was holding and then we had a couple of Low Volume down bars that showed No Supply. This was the final test before the Emini took off and rose 15 points. There were also confirming signals on the other time frames:

• Higher time frame (2,097 tick) had a cyclical low also at 834.50
• Lower time frame (233 tick) had a second turn after an "End of Trend" warning signal (high probability entry point) plus High Volume Churn then Low Volume bar

If you're interested in learning more about the Better Volume indicator then click the link below. Good luck with your Emini trading.

Quick Volume Indicator post today. Just wanted to re-visit the ideas from this article on Low Volume in January.

Low Volume bars are often seen on successful tests of market lows. Monday afternoon's retracement was on Low Volume and showed a lack of Supply. This set up the right conditions for Tuesday's rally.

Volume Indicator: Low Volume Test (Emini 135 minute)

The chart above uses the Better Volume Indicator. Low Volume bars are colored yellow. TradeStation EasyLanguage code for the Better Volume Indicator and PaintBar is free and can be downloaded from the feature article (link below).

Good luck with your Emini trading.

It's funny but my favorite Volume Indicator trigger is the innocuous Low Volume bar. See a Low Volume up bar near a market high and it shows lack of demand. Low Volume down bar near a market low and there's no supply.

Then there's my absolute favorite – Low Volume bars on a tick chart. Because each tick has the same number of trades the Volume Indicator is measuring the average trade size. So a Low Volume bar is a Small Average Trade bar = the Amateurs. Don't follow the Amateurs.

Anyway, last week the 800 level was tested twice. On Monday we gapped up and rallied early. Then in the middle of the day we had a Low Volume down bar (yellow on the chart below).

Better Volume Indicator (Emini 135 minute)

If the sellers were in control they'd have taken their profits and rushed for the doors. But the lack of volume signifies a lack of supply. The day ended with a doji candlestick bar indicating indecision.

The next couple of days will be critical. If we break Monday's high we could well be on our way to breaking 900.

TradeStation EasyLanguage code for the Better Volume Indicator and PaintBar is free and can be downloaded from the Better Volume feature article (link below).

Good luck with your Emini trading.

Emini trading continues to surprise – no, to be breath taking! Yesterday we had a top to bottom range of almost 100 points. Today we dropped 50 points in the last 20 minutes. You need a strong stomach and to stick with your stops. Will the days of 12 point daily ranges and less than 1 million contracts traded ever return?

Bob sent me an email and wanted clarification on the color scheme and interpretation of the Better Volume Indicator. The color scheme is noted on the chart below and can be changed at will in the indicator inputs.

Better Volume Indicator and Color Scheme (Emini 9 minute)

High Volume Churn occurs when the bar's volume is large but the bar's range is small. I color price bars blue when there is High Volume Churn. But I color the volume histogram green. I suppose this is a bit odd and illogical, but you don't have to do the same.

You will typically see High Volume Churn bars in 2 places. The first is at market tops and bottoms. The chart above shows a great example where the Better Sine Wave signaled a possible End of Trend ("END" text plotted automatically), which coincided with High Volume Churn (blue paint bars). New selling volume has entered the market and is overwhelming the buyers and preventing price moving up, therefore, keeping the bar's range small.

The second place where you'll see High Volume Churn was beautifully described by Wyckoff as "Jumping the Creek" or "Falling through the Ice". These terms describe similar price action – only "Jumping the Creek" is for up trends and "Falling through the Ice" is for down trends.

At the beginning of an uptrend, there will come a time when price has to break through the last resistance level made on the way down. Typically there will be strong resistance here and the buying volume will have to be large to overcome the selling volume. During this "battle" the range tends to be small and volume large – resulting in a High Volume Churn pattern.

TradeStation EasyLanguage code for the Better Volume Indicator and PaintBar is free and can be downloaded from the feature article (link below).

Good luck with your Emini trading.

Last Friday's article talked about an approaching cyclical top and resumption of the down trend. However, the Emini continued up and didn't break down until today.

One of my major weaknesses as a trader is that I'm always too early. But trading is about making fewer mistakes and so every time this happens I force myself to analyze the chart in hindsight and understand what went wrong.

The 45 minute Emini chart below shows why Volume Confirmation is the key to picking high probability turning points. All I'm using is the Better Volume indicator below the price bars and superimposed on the price bars with a TradeStation PaintBar study.

Volume Indicator Confirmation (Emini 45 minute)

The sequence last Thursday and Friday went like this:

• 2 Volume Climax up bars on Thursday showing the end of this upthrust
• However, although the range on these bars was large, the volume was not
• 2 Volume Climax down bars on Friday showing profit taking and a potential top
• However, the low was not broken and volume on the second white bar was low

By contrast, this was the sequence from Tuesday to Thursday this week:

• Tuesday ended with a Volume Climax up bar that hit the stops above 1,268
• Wednesday morning also had 2 Volume Climax up bars (one also high churn)
• However, the last Volume Climax up bar closed in the middle showing profit taking
• Then weakness with 4 Volume Climax down bars but all on low volume
• Finally the down trend got underway with a Volume Climax down bar on large volume

The more I study my charts, the more I appreciate how reading Volume Climax bars is the key to volume confirmation and picking high probability turning points.

I hope this chart analysis was helpful to you. Good luck with your Emini trading.