Just a couple of charts after a very quiet day today. We've now had 5 Professional distribution volume patterns at the 1,100 level.

Professional Distribution Volume Patterns (Emini daily)

We broke down out of the congestion zone and we've now come back to "test" the upward sloping trend line. Some traders call this a "kiss" as price comes back to touch the trend line and then "kisses it goodbye" – if it breaks to the downside.

Today's volume was also very low at only 0.6 million contracts traded showing No Demand. Plus a Doji candlestick pattern showing indecision.

Trend Line Congestion Resolved (Emini daily)

Tomorrow we're likely to have a larger range day and I'm going to be watching for signs of more profit taking and maybe the start of a down trend.

Good luck with your Emini trading. Follow this link to the "No Demand" volume pattern article.

The Emini made a "No Demand" volume pattern today. I think we're in the process of slowly rolling over. Rather than an explosive buying climax, I think we're rather going to slowly top out with a series of profit taking and lack of demand volume patterns.

Volume Pattern – No Demand (Emini daily)

In the chart above you can see 3 of the previous peaks in the Emini had "No Demand" volume patterns. The tops have been made slowly and rolled over, while the bottoms have been made quickly with sharp bounces.

There's a link at the bottom of this page to the article about the "No Demand" volume pattern. I've also included my other favorite volume patterns on this chart – they are not entry signals alone but show accumulation and distribution by Professionals before a turning point.

Volume Patterns & Divergence (NASDAQ daily)

I mentioned in yesterday's momentum indicator video that the NASDAQ (and Russell 2000) were not showing the same strength as the Dow and S&P500. The NASDAQ and Russell 2000 tend to be leading indices – they get going first in an uptrend and slow down first when a market tops out.

The chart above shows the NASDAQ is finding it difficult to get through previous highs. Two days ago we also had a Stopping Volume pattern (variant). This shows some profit taking by Professionals. However, we've yet to see bearish divergence on the Momentum Indicator.

Hilbert Sine Wave – Cyclical Turn Approaching (Emini daily)

The Better Sine Wave caught the last cycle low perfectly – a good call on my part, even though I say so myself. Remember "End of the World Friday"?

Anyway, we're coming up to another cycle high turning point – should be made in the next 2 to 3 days. This is the cycle turn after an "End of Trend" warning signal and for me is very significant – often a good reversal entry point. But this rally has been very persistent, so no calling it early.

TRIN Indicator – Overbought & Divergence (Emini daily)

Lastly, the TRIN Oscillator reaches new overbought levels (+207) but is yet to turn. Should be Thursday if we have some price weakness. First sign of weakness is again the TRIN bearish divergence signal (white dot on the adjusted TRIN). These divergence signals often signal the Oscillator turning over early. This will signal profit taking on the Better TRIN systems long positions.

Good luck with your Emini trading. Follow this link to the "No Demand" volume pattern article. And in case you didn't see yesterday's video post responding to a question from a YM trader, here's the momentum indicator link.

Thought the Emini might break to new highs on Friday – instead we got a very low volume up day. Looks like traders left for the Columbus Day holiday early – oh, and my wife reminds me it's Canadian Thanks Giving this long weekend too.

Commitment of Traders data came out Friday and shows Professionals added almost another 3% (of open interest) to their Short positions. I'll post the updated charts later. We're winding up for some fireworks next week. Minimal commentary today, just the charts.

Very Low Volume Day (Emini daily)

"End of Trend" Warning Signal Approaching (Emini daily)

Swing Trading Oscillators Approaching Over-Bought (Emini daily)

Underlying Weak Up Day (Emini daily)

Good luck with your Emini trading next week.

Not much to say today and apologies for the late post (my web server was down).

Monday we broke down. But previous resistance became support and the Professionals halted the decline at 975 to 980.

Tuesday we tried to close Monday's gap between 985 and 992. But we rallied on low volume which shows a lack of buyers.

If we break Monday's low at 975 then watch out below!

Volume Patterns: Low Volume Up Bar (Emini daily)

Good luck with your Emini Trading.

After last week's posts on Swing Trading and Commitment of Traders I hope today's range down day didn't take you by surprise.

Volume Patterns: Low Volume Pullbacks (Emini Daily)

Once again, Low Volume Patterns helped show the lack of demand. Two weeks ago the 950 high was made with 2 consecutive Low Volume Pattern up days – Thursday 11 and Friday 12 June. This led to a sell-off on the Monday.

Last week, we again had 2 consecutive Low Volume Pattern up days – Thursday 18 and Friday 19 June. And another Monday sell-off today.

Hilbert Sine Wave: End of Trend Signal (Emini 2,097 tick)

Range days, like we had today, look so easy to trade. But it fact having the discipline to catch the whole move is really tough. I posted about this last April and how I visualize Tom Cruise in "Days of Thunder". The highest probability trade is to go with the trend and hold 'till the close. You can read the Tom Cruise post here.

Good luck with your Emini trading.

Last Friday's post showed the TRIN Indicator and other oscillators were overbought and had turned down. The Better TRIN System had signaled Short and the uptrend lost momentum. Well this week the Emini has fallen from 925 to the 880 level.

Volume Pattern: Low Volume Up Day (Emini daily)

Thursday was a Low Volume Up Day. This volume pattern is typically a good place to look for another Short entry in a new downtrend. However, it looks like we might test the 920 level before the downtrend resumes.

Hilbert Sine Wave Cyclical Turning Point (Emini 135 minute)

The Hilbert Sine Wave has formed a PullBack cyclical low turning point on the 135 minute Emini chart. Trends typically complete with a PullBack followed by an End of Trend signal – unless the downtrend is strong and the PullBack level gets broken.

Better TRIN System (Emini daily)

Meanwhile, we've taken profits on the Better TRIN System. The last Short trade ended with a 17.50 point gain, or $875 per contract traded. Good luck with your Emini trading.

Emini gapped up today and closed up 24.50 points on large volume (2.6 million contracts traded). Important and somewhat rare volume pattern today – the "Get Out" signal. Now I know that sounds a little alarmist, but let me explain.

Get Out Volume Pattern (Emini daily)

This pattern, first of all, is a variation on the Stopping Volume pattern but with a gap up bar – that is, today's low is above yesterday's high. The regular Stopping Volume pattern shows professional profit taking.

The logic behind this variation is that the Professionals gapped the market up at the open to sucker in the Amateurs, who wouldn't want to get left behind in a new rally. However, they used that Amateur buying to take profits – hence the High Volume and Low Range of the bar.

Now, I'm not saying that this 4 week rally is over but that the Professionals are starting to take profits. Today's news was overwhelmingly positive:

• G20 "euphoria" (personally I have nothing but disgust for these politicians)
• Relaxing the mark-to-market accounting rules for banks
• Pundits (Cramer, etc.) declaring a new Bull market, etc.

And the Professionals use this supposedly bullish background to exit positions on the way up. Remember, tomorrow is Friday – typically a bullish day – and the news will encourage more Amateurs to jump back in.

Cycle Turning Point Approaching (Emini 135 minute)

On the cycle chart we've also got an "End of Trend" warning signal approaching on the 135 minute chart – my primary swing trading time frame. We need the cycle cross to occur and the low of the previous bar to be broken to confirm the signal. But I expect that could happen tomorrow.

Remember, the "End of Trend" warning signal doesn't mean to go Short. Just that we'll probably have some cyclical (range bound) activity before the market decides which direction it will head next.

Good luck with your Emini trading.

Apologies for the lack of updates – just back from 2 weeks snowboarding in Japan. Couple of photos at the end of this post.

Here's how Volume Patterns signaled a high probability short trade and anticipated the reaction to Tim Geithner's speech.

Volume Patterns and Cyclical Top (Emini 135 minute)

The 135 minute chart above is a useful swing trading time frame. Each trading day is broken down into 3 bars and allows you to zero in a little closer to the daily action.

The Emini volume patterns that made this top and high probability turning point progressed like this:

1. On Friday we had a continuation of the up move from the day before with 2 high volume and large range bars (Volume Climax). The Professionals need these high volume moves to dump their positions on the Amateurs.
2. The last bar of the day was both a Volume Climax and High Volume Churn bar (magenta color) – signaling profit taking and new sellers entering the market thus reducing the bar's range.
3. Then on Monday we started with a Low Volume up bar that showed there was a lack of demand and not enough volume to push past the 870 level.
4. This coincided with a cyclical turning point on the Hilbert Sine Wave and all the pieces were in place for a high probability short trade.

Tim Geithner's speech on Tuesday was the catalyst for a panic selling move that led to a 40+ point decline. But don't be fooled – the Professionals set this one up. They were just using the speech as a news item trigger to cause a rush for the doors and panic selling by Amateurs. Poor Tim Geithner was the patsy.

Volume Patterns and 800 Support Level (Emini daily)

The real question is: "Were the Professionals using this as a buying opportunity?"

On Wednesday we had a High Volume Churn bar signaling profit taking by Short traders and new buyers entering the market. Tuesday's low and the significant 800 level held.

We're a couple of days away from a cyclical turning point, so I'm not rushing to judge. But if we get a Low Volume down bar soon it would indicate a lack of Supply.

Niseko Delivers Powder

On a personal note, just back from snowboarding in Niseko, Japan. Once again, Niseko delivered with great powder and absolutely no crowds! The Sub-Prime / Credit Crunch / Global Economic Meltdown has its upsides. The resort was empty compared to previous years and "For Sale" signs were everywhere.

On the Top and About to Go Back Country

I'm so lucky to have a wife who's game to go anywhere.

Good luck with your Emini trading.

We got a nice bounce in the Emini on Friday and a bottom to top range of over 60 points. I'm almost getting used to these crazy range days!

The Hilbert Sine Wave caught the turning point nicely on the 45 minute Emini chart. But I'm always looking for confirmation of turning points with Volume Patterns. In this case we got one of my favorites – I call it the "Red, White & Blue" Reversal.

"Red, White & Blue" Volume Pattern (Emini 45 minute)

The name comes from the default coloring in the Better Volume paintbar indicator. This reversal Volume Pattern consists of a Climax volume bar, followed by a High Volume Churn bar then reversal of direction confirmed with a Climax volume bar in the opposite direction.

In the case of a bottom reversal it's a Climax volume down bar (white paintbar), then a High Volume Churn bar (blue paintbar) and then a Climax volume up bar (red paintbar). So White, Blue and Red. For a top reversal it's the opposite – Red, Blue and White. The Emini chart above should show you what I mean.

The Volume Patterns aren't always as clean as this one. Sometimes you'll get several High Volume Churn bars; sometimes you'll get a final Volume Climax bar after the High Volume Churn bar. The Climax Volume bar in the opposite direction can also be late – but it's designed as confirmation, not necessarily an entry signal.

Volume Pattern "End of Trend" Confirmation (Emini 5 minute)

I like the High Volume Churn bar to coincide with a Hilbert Sine Wave turning point. The lower time frames should also be showing an exhausiton of the down trend. In this case the Emini 5 minute chart was showing an "End of Trend" warning signal. But any cyclical activity would have shown that the strong down trend was over and a trend change was possible.

When using multiple time frames like this I use a multiple of 3 between the lowest time frame and the intermediate time frame (5 minute to 15 minute). Then another multiple of 3 between the intermediate time frame and the highest or trend direction time frame (15 minute to 45 minute).

I hope this article about Emini day trading using cyclical turning points, volume patterns and multiple time frames was useful to you. Good luck with your Emini trading.