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Market Consciousnesses – Running Through a Flux Capacitor

Today's action is a cause for some special attention. If you read these pages you will no doubt be aware that we have presented a scenario for analysis purposes that has been accurate, timely and disciplined. Using this approach, we were in front of the sharp rally and the downturn into today. We expected that today would likely be a weak day generally - given the intraday MSP posted this AM and daily flow projection shown on the day-of-week tendency subgraph on the longer-term MSP charts - Thursday's being the strongest close-to-close momentum to the downside. Regardless,  downside potential into the afternoon was highly reasonable and additionally a reaction/retracement/bounce would have been entirely reasonable as well and this was not forthcoming. Today, however, did a few things which are quite concerning.

We do not change analysis to fit the market, Rather we stick with our discipline and accept the distribution of inaccurate projections and unfulfilled probabilities as valuable feedback and information. That is EXACTLY WHAT IS HAPPENING at the present. Though the markets are currently on track with our analysis and we still expect a bounce in the near-term into early September, there were key deviations and issues with today's reflections of market consciousness via our tools that deserve some special discussion.

August 18th, 2015 eTick-Tools X-Tick Breakdown

August 18th, 2015 eTick-Tools X-Tick Breakdown

You may hear us refer to "X-TICK" triggers. X-TICK's are rankings of ultra high emotional exertions by market participants to sell/buy as a part of capitulatory extreme behavior. Capitulation in our terms is described in more detail under the eTick-Tools Core Concpets pages. In order to trigger an X-TICK the urge to sell and energy invested has to rank in the top 19% percentile (most of the time higher) of all selling efforts and events over the last 15 to 20 years. As you can imagine this is not an easy thing for the market to do. Today we opened with an X-TICK and got a decent bounce from it of something like 8 or 9 ES futures points. However, the thing with X-TICKS is that professional buyers (or sellers if the market is rising and generating a buy extreme -as the case may be) like to show up and take weak handed contracts when they are made available - X-TICKS are precisely these types of areas. WHEN these professionals then subsequently get run over the X-TICK is broken and it is demonstrating that the market sellers have real conviction. This was expected this morning and occurred. However, this afternoon we got two more X-Ticks that ranking in the top 9% of all selling emotion extremes in the last 15 to 20 years, and though each got a 5 point bounce or so - they were broken subsequently. Additionally, each X-TICK was at a lower and lower price which is a sign that professional buyers with conviction were not shifting the trend and ineffective. Breaking this many X-TICKS in one day is a serious event and a sign to remain alert. This is a sign of increasing risk to the markets capability to stage its reversal. This can not be overstated. Each X-Tick today, being lower than the previous one, indicates a significant capitulation going on among market participants as a whole. This is always something to keep an eye on.

First thing this morning we got a reasonable negative GAP TOOLS emotional analysis that suggested that the market had normal probability distribution for a gap fill. In this case, that means: "not that likely but plausible". However, it got a high rank (on the first bar of the cash session when it's analysis is scheduled to trigger) that a breakdown would occur below the opening range. This was a large negative as it is often that such an event can lead to a trend day down. In this case, trending down was expected into the 1;30 to 2:00 pm timing window in the afternoon.

There were quite a few reasons that the market was being afforded some room for a bounce this afternoon or in the near-term. Timing, longer-term market structure, convergence of support in the 2044 area (which was pointed out as a possible target for today), a neckline on a very large support shelf that also is a pretty symmetrical head and shoulders pattern and intraday behavioural analysis that would usually score towards some strength showing up this afternoon. As it turns out, the markets ran over these areas after setting up months and months of work above them without even reacting with a small bounce attempt - something reflected in the X-TICK breaches described above. The market had other plans for today. Primary degree support is at 2020.5 to 2010 on the SPX cash and probably is now a magnet before a bounce occurs.

One of the things that is very important to understand is that when the market does not follow market structure, as it began to do today, this is often a sign of a change in market consciousness. Market Structure, the way we measure it and define it, is an objective, transparent and unbiased analysis/evaluation of a market within its contextual probability skew. Therefore, when a difference occurs and especially one that is substantial, it is important to take notice. Today's deviation was just minor so far but could get much more if it wants - so, tomorrow and the next few days will help to make things much more clear. Currently this tracking deviation from probabilistic market structure scenarios, is of significant concern, An analogy of this effect if similar to hitting the brake pedal in your car and instead of the car slowing down it speeds up. It's an indication that something is wrong and it's a warning that aberration and risk is increasing.

Additionally, we closed below the neckline of the 6-month head and shoulders - breaking through it without even bounce at the 2043.5 SPX Cash area - this is very concerning.currently, the market most likely needs to go lower a bit, probably to the 2020 area and then attempt its bounce - which as mentioned earlier should be expected into early September. September offers an early month high or possibly a higher high around the 21st. Currently, as mentioned in today's AM post, favored is an early month high for the US markets with a lower high retest into the 21st. HOWEVER the capacity for this bounce attempt to be very small or worse to become a running pattern is of significant concern as this could easily lead to a panic. Given how much leverage and risk the Fed and other central banks have infused into the risk markets it is is notable importance how markets react to a bounce attempt into early September. If the bounce if very weak and thin, it would be a good idea to increase power to the flux capacitor and prepare for an emotional and high volatility future.

10:30 AM High Attempt Failed…Bearish Market Structure Continues Tracking

For the record, one of the elements that we attempt and I believe achieve, is market analysis without preconceived bias. Last night pointed to a high on Wednesday daily market structure and also probabilities for one of the strongest momentum days of the week today - usually upward biased. This morning early, before in our expert lounge we lowered the probability of that potential dramatically. This was around 5:00 or 6:00 AM. When something substantive changes, this is one place that is not going to be embarrassed about making the determination promptly and also determining if "EDGE" is compromised. Therefore, the impact of a change in outcome for the market probabilities today for us was of very little impact. It has not been easy to develop this kind of discipline and capability. BUT it is one of the distinct advantages of NOT using indicators and instead using data, statistics and probabilities and combining this with real-time emotional tools such as e-Tick-Tools.

When strongly bullish market structure and probabilities get overrun, often time, market participants get trapped. So, the moves can be as strong in the opposite direction if these participants become disoriented or forced sellers or buyers as the case may be. Therefore, today was and is a potentially important day. It is also, YET ANOTHER good example of using bi-modal decisions to navigate without getting trapped in expectations, opinions or notions.

It was clear in the early morning update that market structure favoring a bullish outcome was no longer highest probability, due to the patterns from 10:00 pm to 3:00 AM. These was a shot at recovering, however, noting all the anecdotal contributors supporting weakness and the importance of performance at 10:30 AM, the market responded in highest probability fashion. Delivering on the BEAR Market MSP probabilities at a 90% correlation. Gap Tools delivered the fill that it anticipated, and that led straight into the 10:30 AM timing. While there, e-Tick-Tools called a capitulatory BUY EXTREME. Which translates to as buying exhaustion. This was NOT confirmed by Accumulation Index, which undermine today's upward movements by showing emotions and execution feedback consistent with selling psychology even at the highs.

This post is not about per se today's outcome, it is about the important to have the humility to adjust to the markets probabilities without hanging onto previous assumptions and expectations.  This afternoon 2:30 PM to 3:00 pm is important as we can consolidate there. Probabilities favor further selling from this consolidation into the close.  3:00 pm is timing, and one should be careful and aware at time windows.

Tick Tools Today  June 24, 2015

Tick Tools Today June 24, 2015

Another Example of Bi-Modal Switches – TODAY

Today was a classic example of bias-free decision-making via Bi-modal switching. The scenarios were clear this morning. Given the data and evidence, a slight upward bias was preferred. This was easily adjusted based on a combination of timing and structure setting up a definitive bi-modal switch. In addition to that GAP TOOLS analysis of the gap showed another low probability gap fill and higher than normal gap breakdown probability. An X-Tick triggered at the open that needed to hold. It broke down AND triggered a probability for a stop run against long positions. This all happened between 8:00 am and 9:31 AM...putting 1:30 PM as timing for a likely low rather than high.

Then as shown below the most bearish scenario tracked and moved timing forward to about 2 hours earlier. The perfect way to mitigate emotions and stress. Not every scenario works out - but with this type of evidence, the amount of conflicting emotion and information are minimized. All without a focus on MACD, RSI or Moving Average...which are merely tertiary tools.

Bi-modal switching in action

Bi-modal switching in action

Below is the Gap Tools and Tick Tools cut today:

June 12th, 2015 Intraday  e-Tick-Tools  Results

June 12th, 2015 Intraday e-Tick-Tools Results

Intraday Update – Timing Approaching 2106 ES is KEY

Today was NOT choppy as market structure conflicts were indicating...This was cleared up at the open with the GAP TOOLS probabilities favoring high odds of a breakout and low of a gap fill and also with Stop-Run and Buy Extreme breakouts on the open...does not get much more powerful than that....rough day for the Bears.

June 10th, 2015 Intraday Market Structure Projections Update

June 10th, 2015 Intraday Market Structure Projections Update

Note, also that Accumulation Index (not shown) has been making new highs all day suggesting that more highs could be possible - in that case; the next situation becomes very critical. At 11:17 AM an X-Tick Buy Extreme (also not shown) occurred at 2,106.75 on ES futures that was in the top 6% of all buying events in the last 15+ years...this is normally bearish HOWEVER, a breakout OVER this level could be a sign that something big is coming as follow on highs would be expected with a break of such a huge exhaustion and eMotional energy expenditure.

Tick Tools Live Today…

Below are the Tick Tools and Gap Analysis for today. As can be seen, these emotional events were a significant insight into the activity in the markets today. From the very first bar, Gap Tools had a probability analysis favoring a breakdown of the opening range and only moderate odds of a gap fill. Accumulation Index (the magenta line on the price chart) confirmed every low and the market opened with terrible cash flow activity.

Very powerful signals and insight also to the other non-correlated tools in our suite.

June 4nd, 2015 e-Tick-Tools Live

June 4nd, 2015 e-Tick-Tools Live

Adaptive Modal Decision Making & Projection

This post updates today's intraday market structures.  The Daily Projection posted this AM was for weakness into tomorrow AM. In addition, a plethora of data to help during the day from e-Tick-Tools, Gap Tools (which did not favor a gap fill but did an opening range break down) and accumulation index there were a lot of data to support the weakening foundations of the market today - plus a number of capitulatory extremes marked a break of 2105 as critical. Market needed to regain this or was facing the 2088 area that was mention several times here on these pages.

Below is an example of even coming out looking for morning lows as a bullish potential was probabilistically reduced in outcome at each timing area and why...Essentially by 12:00 PM most likely structure was relegated to the CYAN 24 month QE projections - this information among quite a few other elements and discussion was available in our community in real-time today.

June 4th, 2015 Intraday Market Structure Projections

Daily Projections – Smarter than this Analyst

I was hoping to be posting, that finally the streak was over for Daily Market structure projection. As a statistician, I dislike it when things are too perfect. I was almost ready to start a self-congratulatory post noting my successful prescient ability to determine that a daily projection was likely to fail. But thought better of it as there were too many other market structures indicating that the max +/- 3-hour window for 24-hour projections was still on the clock.

With 12:30 pm time window and an intraday market structure and gap tools indicating probabilities favoring an upwards reaction and excellent e-Tick-Tools trigger today,  the markets delivered on expectations from our data and statistical analysis.

June 2nd, 2015 Daily and Weekly Market Structure Projections

June 2nd, 2015 Daily and Weekly Market Structure Projections

 

A note about Gap Tools. Readings regarding probabilities are between 25% very low probability and 75% very high probability. A statistical probability result off the open of 50% represents a significant edge that gap fill was likely. 65% result would have been very high...and about as certain as our tool could get on analysis of a gap. 50%, therefore, was much higher than the average statistical edge. What it means is that on 50% of all out model cases, this type of gap actually filled. This analysis is done in real time based on 15+ years of data.

e-Tick Tools Expert Lounge – Live intraday analysis

Not only is eMotional analysis a unique way to look at the market and for high probability entries, but when combined with Gap Tools, Waves/Symmetry and traditional disciplined TA by an experienced analyst...you get to see high probability setups that converge with other elements that make normal probability work look like guess work. This is a chart posted live in the Expert Lounge - which is a community live conversation, sharing and analysis area. Not only do setups like this get identified but also high-quality learning and exchange occurs. This is very valuable for several reasons:

  • It's most likely the best way to learn,
  • Great analysis that is useful, timely and executable.
  • Others ideas also get shared and great questions asked,
  • Feedback from the process is something that we can use in development of enhancements to the process.

If eMotion analysis in real-time strikes as uncorrelated and something that you feel may give you and edge (personally, just look at the chart and I think it's obvious to us it's a significant edge) then you should do a free trial while we are launching the site while its being offered and get to know more about how things work - by working with our exceptional and experienced live analysis talent.

S&P500 Expert Lounge Live Chart Analysis

S&P500 Expert Lounge Live Chart Analysis

e-Tick Tools Review for the day

Below is the e-Tick-Tools chart for today. (These charts are updated on a daily basis in the Historical Analysis Charts section of our site.)

Quite a day overall and exceptional day for e-Tick-Tools. Emotional analysis of the market is sometimes so prescient that its accuracy surprises even when one comes to expect it. Today was such a day. The daily projection called for an up day from Monday AM to Tuesday AM. Monday is statistically one of the most bullish at this time and all it could yield was 8 points on ES. So, we can count another notch in the belt for the daily market structure projections. Interestingly, tomorrow is projected slightly up or consolidation with an up bias from this morning's lows. I must say, I will not be surprised with the market gaining traction here and getting an up morning thus fulfilling the daily market structure.

However, without commenting on specifics in the markets this is a time that anything can happen. The charts presented on the weekend demonstrate that there is precious little capital to hold the markets up if something goes wrong. Most investors are not doing well and have not for a long time and do not have much in reserve. To do well in the market you need to operate overnight or buy and hold and operate without a concern in the world that something can go wrong...because as they say - this time IS different.

Below is today's overview of e-Tick-Tools analysis. Also, note a basic view of Gap Tools is also displayed. Gap Tools posts Gap probabilities after the first 60 seconds of the market open...so gap info was generated at 9:31 am. Since the site is new we wanted to spend extra effort to post educational content regarding some of our work. Hence the fairly significant number of posts over the last days. The objective of the blog is not to post with such high frequency. However, markets are at an interesting point. In addition, we wanted to meeting the public with some extra effort applied to sharing things we think are important.  We hope for a long and fruitful relationship with our clients and readers.

May 26th, 2015 eTick-Tools-Day Review

May 26th, 2015 eTick-Tools-Day Review

e-Tick Tools Today…example of Real-Time market eMotion analysis

This is what e-Tick Tools saw today at the open. A bearish stop run RAID of longs warned with text on the screen. A Broken confirmed selling capitulation - which usually means bulls lose. An X-Tick at the time window low and Gap indications in the first minute showing that gap was likely to extend...and fill was not likely...

We know of no other charts that can show the same kind of analysis in real time

Tick Tools Today May 26, 2015 - What our clients saw

Tick Tools Today May 26, 2015 - What our clients saw