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.
