Market tops take a while to develop with Professionals taking profits and entering short positions gradually. Here's an intraday Emini chart from Friday showing the Volume Patterns that you often see.

Volume Patterns at Market Tops (Emini 2,097 tick)

The topping process starts with Volume Climax up bars followed by High Volume Churn (red and blue price bars in the chart above). High Volume Churn occurs when the volume traded is high by the bar's range is small – this shows sellers are entering the market and preventing the price advance.

The next attempt at the 895 high happens on Low Volume with a Low Volume Up Close bar (yellow price bar in the chart above). This shows a lack of Demand and indicates the up move is suspect. This move also coincides with an "End of Trend" Hilbert Sine Wave signal.

Just a point of interest – if you're using Tick Bar Charts and a volume histogram, low volume bars show that the average trade is small. The average trade is small when Amateurs are trading, so whenever I see a Low Volume (yellow) bar I know that it's the non-Professionals entering the market and I probably want to be doing the opposite!

The final attempt at 895 happens with a spike up bar that closes on the Low and coincides with a cyclical top turn. We've now tested 895 three times with profit taking then No Demand and finally a rush for the doors – a 30 point decline ensues.

The chart above uses the Better Volume Indicator and PaintBar. The code has gone through a number of revisions over the past 6 months. One day I'll get around to updating the Better Volume feature article. But in the meantime, if you'd like the FREE TradeStation EasyLanguage code you can download it by clicking below.

Good luck with your Emini trading.

Ignore the media. Today's story was a close in the middle on high volume – profit taking. Professional buyers returned to the market at 1,000 and drove the Emini up to 1,050. We now have a preliminary support level that will probably be tested.

There was a fair amount of churn volume, indicating profit taking, at the end of the day around the 1,060 level. So we could see the Emini re-test the 1,025 level tomorrow. Above us there's the gap between 1,082 and 1,103 that will act as a magnet until filled.

Swing Trading Oscillators Over-Sold (Emini daily)

I haven't posted any Emini swing trading oscillator charts for a while. Not surprisingly all the oscillators are over-sold and yet to turn up. The first bullish signal has appeared though, with a Bullish Divergence pattern on the TRIN (see chart below).

Bullish Divergence on TRIN (Emini daily)

Today's adjusted TRIN reading was only -33, moderate selling and higher than the previous extreme lows on the adjusted TRIN (-293 and -211). You can read more about the Better TRIN indicators in this feature article.

Calling bottoms in this market is a foolish business but I wouldn't be surprised to see the momentum starting to shift to the upside later tomorrow. Let's see what happens. As always, trade your setups not your intuition. Good luck with your Emini trading.

Sunday's post showed a cyclical top in the 135 minute time frame and said the downside momentum would likely continue. Well the Emini did fall to around 1,180 this week and closed the 1,219 to 1,238 gap in the process.

The Hilbert Sine Wave has now turned on the 135 minute chart and the Emini formed a cyclical low at 1,180. The momentum has now turned to the upside and should continue. However, any break of the 1,180 cyclical support would be bearish.

We're likely to get a confirmation on Friday of the Bailout Plan and this could be the fundamental news the market needs to be propelled higher. But after hours trading is weak and so I'm being cautious.

Volume Patterns at Turning Points (Emini 135 minute)

The chart above shows the cyclical turning points on the 135 minute chart. It also has the Better Volume indicator (latest version) to show what the buying and selling pressure was. Turning points or reversals have a pattern that usually goes like this:

1. Climax volume down showing exhaustion volume or capitulation
2. High volume churn showing buyers entering and the trading range contracting
3. Low volume showing lack of sellers and no down side follow through
4. Climax volume up showing the start of a new move and shorts covering

Note that the last bar of the day showed high volume churn. This was traders unable to push the Emini through the 1,224 level, where there must be sellers waiting. Let's see if we can break that level tomorrow. Good luck with your Emini trading.

Bingo! Looks like the test back down to 1,200 has been successful. Let's take a look at the big picture first with the weekly Emini chart and Hilbert Sine Wave.

Hilbert Sine Wave (Emini weekly)

The cyclical low cross happened 3 weeks ago but this needs to be confirmed with:

• Break above prior bar's high
• "End of Trend" signal on lower time frame, and
• Confirmation large volume up bars

Last week the Emini broke above the prior week's high and so the first condition was met. The Better Sine Wave indicator then starts plotting the cyclical low Support levels (red dots, one so far on the chart above).

"End of Trend" Signal and Volume Confirmation (Emini 135 minute)

Next we drop down a couple of time frames to the 135 minute chart and look for an "End of Trend" signal. One time frame down from the weekly chart would be the daily chart. Then another time frame down from the daily chart would be the 135 minute chart (exactly 3 bars per trading day). I like to use a ratio of 3 between time frames but daily to weekly is a ratio of 5 and will just have to be good enough.

The 135 minute Emini chart above shows we broke into a down trend on June 20 (white dot). On July 18 we got a Pull Back signal (automatically marked "PB" on the chart). Normally we get a final cyclical turn and "End of Trend" signal – but this happens when the pattern is "clean". In this case we got an over-shoot above the Pull Back (red dot) and in these cases I don't classify the pattern as a true "End of Trend" signal.

In any case the cyclical low turn was confirmed today with red support dots plotted under the low turning point. So the second condition was met, although the "End of Trend" signal was not a "clean" one.

Lastly, note how the last decline from 1,290 to 1,230 was on progressively lower volume. This suggests less supply and fewer aggressive sellers. This is a successful "Test" of the 1,200 low.

Then today we had a large volume up bar, followed by a midday quieter bar and then another large volume up bar. This is volume confirmation and shows the last cyclical turning point is likely to hold – and the third condition is met.

Swing Trading Oscillators (Emini daily)

Quick check of my swing trading Oscillators. The Better TRIN and Better Smart Money have both turned up from over-sold and so this gives me more confidence that we'll get another upswing, possibly lasting several weeks.

Housekeeping Notes

I've recently updated the Better Volume code and so my charts don't look quite like yours (if you're using the Better Volume indicator). I will publish the new version of the code very soon and of course it will remain a free download.

I'm also using an updated version of the Better Sine Wave. The algorithm has not changed but the new code plots Pull Backs and has alerts for Trend Breaks, Pull Backs, End of Trend signals, etc. There's also a paintbar for trending conditions. I'm writing a feature article on the Hilbert Sine Wave and will circulate the new code to customers shortly.

The contact form on the Emini-Watch site is currently broken. I've not fixed it yet as I was getting burnt out from posting articles and replying to emails. I do appreciate all the comments, questions, suggestions and compliments that I get from visitors though. Thank you.

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

Just a quick Volume Pattern post today. The Emini gapped down and then we saw a selling climax volume pattern early in the day around 1,335. This level was then re-tested a couple of times later in the session. The big question is whether this 1,335 level on the Emini will hold.

The "end of trend" pattern I'm looking for on the 135 minute chart is yet to appear and so we're still in a down trend. However, we could get a bounce in the Emini tomorrow as a result of today's selling climax volume pattern.

Selling Climax Volume Pattern (Emini 15 minute)

Good luck with your Emini trading.

From Wednesday's post: "My best guess is we'll get a bounce based on this volume pattern … but hit resistance before we finally complete this down leg."

Buying Climax & High Volume Churn (Emini 27 minute)

The Emini has bounced up 20+ points from Wednesday's close and has hit resistance around 1,360. The chart above shows we had a buying climax early on Friday. Then high volume churn late in the day when the Emini re-visited the 1,360 level.

To me, this suggests Professional selling and we're getting ready to complete the down leg. Monday's action will confirm the pattern – to push through 1,360 we'll need another surge of buying and if we don't get it the Emini will fall away.

Cyclical Top Approaching (Emini 135 mintue)

The chart above shows the Hilbert Sine Wave is coming close to making a cyclical top. This would mark the end of the pull-back and another down leg for the Emini.

Couple of other points worth noting. My swing trading oscillators (TRIN, Put Call Ratio and Smart Money) are not over-bought yet. But seasonal patterns suggest the Emini peaks mid-June and finishes the month with a strong down move.

Good luck next week with your Emini trading.

I didn't expect the market to fall so hard today – thought we might break and hold above 1,405. But we've had an exhaustion volume down bar that revealed Professional buying and so I'm still bullish.

Exhaustion Volume Pattern (Emini 15 minute)

We came down to 1,385 and appeared to hold. But just before midday we broke to new lows and this panicked the amateurs into selling. The Professionals stepped in and absorbed the panic selling.

As most of the sellers had sold, the Emini then started a steady climb back up to 1,385. We might still get another wave of selling and test the 1,380 lows – but if this is on lower volume it will be a successful "test" and be a bullish signal.

Side note: The Better TRIN Oscillator has turned down and gave an exit signal on a long trade (break-even). I'm reluctant to go short here because the other oscillators are not over-bought.

Bond Market Bounce (Daily bars)

Just a quick re-cap of last Wednesday's Bond market chart. We've now bounced back into the congestion zone, which has removed the dark cloud over the stock market – for now. We'll keep watching.

Good luck with your Emini trading.

Volume Pattern post today with Exhaustion Volume bars taking out stops on the way up.

Exhaustion Volume Pattern (Emini 9 minute)

Today we had the day I thought we'd get on Friday! The Emini started up and gradually took out all the stops all the way up to 1,440. It did it in 3 legs each with a large volume, large range bar – exhaustion volume pattern (colored red on the chart above).

Then the Emini couldn't hold 1,440 and we took out 1,430 on the way down on large volume. At the end of the day we bounced back up to 1,430 but I don't think this will hold. I'm now waiting for an exhaustion volume pattern on the downside to show where the large volume buying comes back into the market.

The Better TRIN Oscillator turned down today (as did the Put Call Ratio Oscillator) and that signaled to take profits on our long trade. The average entry price was 1,400 and so the profit on this trade was almost 30 points.

Good luck with your Emini trading.

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.

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.

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.

Volume pattern showing professional profit taking on Friday. The Emini gapped up on Friday and we had a large volume (2.0 million contracts), low range (13 points) day.

The large volume and low range indicates a high volume churn day. This was also a "Stopping volume" pattern with the volume higher than the day before but the range was smaller – and the Emini couldn't make it through the 1,400 level. Add in that the market was gapped up as the non-professional traders chased prices and this was a perfect day for professionals to take profits.

I'm not saying that the top of this move is in – just be careful not to jump in late. My medium term forecast is still bullish but that doesn't mean we won't have retracements along the way. Time to watch and see what the market will do next.

TRIN Indicator Update

TRIN Indicator (Emini daily)

TRIN indicator signaled a bearish divergence warning signal on Friday. So looking to take profits on the last trade and possibly set up for a reversal trade. Follow this link to read more about the Better TRIN indicator.

Good luck with your Emini trading.