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.
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.
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.
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.