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.
