Large Emini Volume and Hilbert Sine Wave
In Friday's post we were expecting a pull-back trade based on the John Ehlers' Hilbert Sine Wave on the 27 minute Emini chart. We got the pull-back but it came with a slight overshoot, shown on the chart above.
The next time frame up, 45 minutes, had the same pattern and nailed the turn exactly. Check out the chart below. We're also about to see an upward turn in the Sine Wave which would signal a "Complete" pattern in this time frame - and an end to this down trend move.
We're short from 1,523.25 and took profits of 10 points on half the position at 1,513.25. Yes, we took some "heat" on this trade - 8 points worth. But you have to be able to stand the volatility without it knocking you out of a good trade prematurely. That's the way I trade at least. It doesn't suit everyone and I'm sure there are traders out there who nailed the exact turn at 1,531 (take a bow IndexTraderBlog).
Anyway, open profits on the second half of the position stand at 18 points, in after hours trading, and stops have been lowered to break even. The question is what to do now - take profits or wait and see if the Emini falls through 1,503? For me the most interesting part of Tuesday's trading was the volume - 2.4 million contracts traded, according to TradeStation data. This is huge, almost two and a half times average.
The chart above shows the volume was largest during the last 135 minutes of trade, when the Emini dropped 20 points. This should have been a "test" down into recent lows and resulted in smaller volume if supply had truly dried up and the market was ready to move up. Instead we got almost panic selling. Frankly, I'm in two minds - I'd like to take profits but we could easily fall off the edge and drop below 1,500.
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