Posts

eMotional Volume Histogram – How to Use It

Members are certainly seeing the histograms updating on the bottom of the cycle charts - but for the most part just as certainly ignoring them. These bars contain unprecedented information if you are looking to pinpoint times that a higher degree of risk in one direction or another exists. Interestingly there are several setups which are emminently recognizable that help to understand when psychology is shifting on the short-term and even medium-term (via long-time frame cycle charts). The eMotional Volume bars are also helpful in determining whether a retest of inpulse cycle break is a high probability reversal or not. This is a subject for our upcoming webinar too.

eMotional Volume Histograms

eMotional Volume Histograms

Major and minor updates to eTickTools

Lots of Stuff and Projection Update

This weekend we completed a major upgrade of charts and chart streaming for the mcm site. We added significant new enhancements to the eTickTools Project and we rolled out some new analyses - Historical eMotional Extremes.

From a housekeeping standpoint we will bullet-point the list.

  • Fixed Cycle Display and Markers on 5-Minute chart
  • Fixed Scaling issue on 1 and 2-minute charts
  • Addressed the printing of a double "potential stop-run" when triggering at the open for eTickTools
  • Added Percentile Ranking for each buy and sell-extreme for eTickTools - this is a big deal
  • Added a Ranking for the volume extreme taking place during a Buy or Sell extreme for eTickTools
  • Added auto updating Historical Extreme Charts for both the S&P500 and DOW
  • Added an alpha toolset for DAX that is just in testing phase
  • Added various other general clean-ups and labelling for tools and charts

The additions of rankings to all the eTickTools extremes is a significant enhancement and allows an unprecedented and high quality of gauge of the amount of effort the market is exerting at a specific capitulation point. The addition or a ranking of the amount of transaction at the point is also a significant enhancement. We encourage you to ask questions regarding any of the enhancements.

Major and minor updates to eTickTools

Major and minor updates to eTickTools

Regarding the markets, Daily/Weekly market structure projection has suggested that a consolidation after the projected bounce during the 1st week of September occurred. This is indeed appearing to be playing out. Markets are very bearish and people are very scared which could contribute to a pause in down movement and leads to strength into the week of the 21st. It needs to be made clear that these are contextual time ranges. If you have been reading these pages, you now doubt know that week 1 of September has been viewed referred to as potentially important point for the markets and as such could be a significant turn from an up move to down to new lows or in the more likely case, a down move that comes in the form of a period of consolidation for further highs into the week of the 21st. Additionally, note that MSP was correctly projecting weekly weakness into Thursday, August 20th. However, the turn from down to up did not come during Thursday's day session as projected but rather 9:30 AM on Monday - 1.5 sessions away. It seems to us that a projection made several months ago for a down week into Thursday the 20th being met to within 12.5 cash trading hours is about as accurate as one can reasonably expect during a market dislocation and certainly more accurate than most wave extrapolations and technical analysis would usually be able to be with any reliability. This condition resulted in needed in to rely on shorter term tools: eTickTools and Cycle Impulses for example. We did a webinar on these subject (http://mcm-ct.com/blog/webinar-follow-up-and-content/) and plan another because in the coming markets impulsing beyond emotional extremes and through cycle supports is a key tool that can objectively help to remain on the right side of a market even when the desire of a trader are to take the opposite direction - such as buying weakness when in fact an impulsive move downwards may just be beginning.

As such, eTickTools did an exemplary job of pointing out that the markets were likely under a severe capitulation by triggering multiple X-Tick downward selling impulses during that Thursday's session.  We made this post wich is a good reference: Market Consciousnesses – Running Through a Flux Capacitor. Indeed, the markets have been rushing back through time and retracing the gains of the last years. The danger continues to be high, though for the time being abated somewhat.

DAX Market Structure Projections

DAX Market Structure Projections

Below is an updated chart of the Longer-term MSP (Projections) for the S&P500. With the DAX suggesting a shallower pullback, edge is increased that probability of consolidative behavior for S&P500 is increased into strength into [5] on the chart below. This chart is suggesting a period of consolidation/weakness and then a push into the long referred to week of Sept 21st.

S&P500 Market Structure Projections

S&P500 Market Structure Projections

Update of Highly Divergent Projections

This is a very unusual situation. The last time something similar happened that I can recall was in November last year. At that time the market continued in an unending fight against their internal metronome. Not only that, they fought seasonality too with central banks leaning very hard on shorts as BOJ's publically Kuroda admitted. The result was a swift snap back that was much stronger than it otherwise would likely have been in December. It appears we are in a similar situation. the markets contradicted their inner metronome all week. Regardless of all of this there is valuable information in the fact that markets have not followed course.

Either we are at a significant high or significant breakout. Only problem is that the horrible performance by the rest of the markets. Midcaps, Russell 2000 and Transports put in weak performances relative the major markets (roughly: almost 4% for SPX, 2.7% transports, 3.5% on DOW, 3.4% for RUT, 2.6% for Midcaps). Not only that bearish looking candles. None of the large up days included a breakout volume or emotional commitment. This is not evidence you would normally like to see on a successful upside breakout.

July 17th, 2015 Daily & Weekly Market Structure Projections

July 17th, 2015 Daily & Weekly Market Structure Projections

Drama in the Market Seas – a revealing look via the MCM Market Indexes

This article goes into detail regarding some diagnostics of the market that are not easily or often seen and most importantly are most often inaccurate as publicly they are presented. We go into some considerable detail to see what is happening under the hood of the market. The surprising discovery is that most investors are most likely not doing very well.

Drama on the Market Seas

Drama on the Market Seas

MCM DAY INDEX & MCM CLOSE INDEX

For the day trader - the day session performance has been under-performing for a very long time over all. However, if one were trading the opening and/or the close session - for the last 6 months performance has been especially challenging. Despite all the headlines regarding new highs in the markets every other day:

The most surprising discovery is that most investors are most likely not doing very well. For the day trader,  market day session performance has been under-performing market direction substantially for a very long time. However, if one were trading the opening and/or the close session, for the last 6 months performance has been especially challenging.

To summarize, despite all the headlines regarding new highs in the markets every other day:

  • For the closing session long traders, the market is an absolute disaster and likely would lead to egregious losses taking account balances back very near 2009 levels.
  • For opening session long traders, the market is not quite a horrible with account balances presently approaching Oct 2008 levels.

MCM Indexes and MCM Smart Money Indexes

MCM Indexes and MCM Smart Money Indexes

MCM GAP INDEX

There is one area of performance that has been remarkably good.

Much better than at any point in history that we have examined.

 From what it seems - quite probably "too good".

Evidence of central bank cooperation and intervention abound. We have discovered quite a few Central Bank driven "market structures" that have been very strong. Interestingly, it appears that central bank money printing and money amplification efforts via asset interventions and appreciation have been in place for a very, very long time. These market structures go back in history to the 70's and 80's. What seems clear, market crashes notwithstanding, is that central banks are operating and have been operating to increase and amplify the quantity of money via asset markets for a significant duration. Regardless, however, the levels central bank participation of the last years have been unprecedented. , there we have it, the best performance in the markets has been in the areas where the central banks get the most "bang for the buck". The thinly traded and easily influenced overnight session.

Result: The best and pretty much only performance in the markets since 2009 has been in the areas where the central banks get the most "bang for the buck". The thinly traded and easily influenced overnight session.

Currently, from a cursory appearance, there seems to be somewhat of a panic going on. hThe GAP INDEX is now dramatically outperforming prices...while at the same time market are dramatically underperforming during the high liquidity sessions. The question that comes to mind is:

"What happens if the overnight session levitation and performance starts to fail?"

This question can be answered in context: If it were not for the overnight session performance over the last nine months, the markets would be in an all out bear market and most probably crash.

SMART MONEY INDEX

The SMART MONEY INDEX is often touted and bandied about on the internet and TV. However, rarely can a more unviable and distorted index - being highly aberrantly calculated and on its face flawed - be so mispresented.

For this reason, we calculate a reasonable, viable and thorough version of the concept that uses sophisticated synthetics for the dramatic consequences of the ultra slow open of the S&P500 and highly distorted opening prices. As with our GAP index, we use a combination of futures and other ETF 's to synthesize the cash opening prices. This leads to a very high accuracy using our methods of calculation as opposed to the what we normally see published. For the record, it is our opinion that is usually best to ignore any general reference to the SMART MONEY INDEX. Though the SMART MONEY INDEX concept sounds nice - sexy even, as it is calculated it is statistically distorted to the point of being useless.

Using a reliable methodology, however, valuable data can be gleaned from the SMART MONEY INDEX concept. We call our version that the MCM SMART MONEY INDEX. What this tool shows in the included chart in the article via the green line - is a collapse in the "SMART MONEY" investor commitment.

Keep in mind that with overnight Central Bank activity at record highs, the impact of a dramatic fall off in institutional participation may have different impacts than expected. However, it seems that the case for a sudden collapse in the markets due to the absence of professional money may be increasing.

 

 

 

The 2015 January Effect: Status – On Track

Early in the year, we decided to do the most thorough study of all the behavioral and market structures possible to confirm or deny the veracity of the January effect. The resulting study produced the "MCM January Effect Model" with very interesting and powerful results.

The chart shown below puts a dim light on the outcome of this year. The rest of the report produced rather stunning results and to our surprise, proved that using a structured approach to a January effect could reveal market behavioral tendencies that are WAY beyond question concerning validity. Some data outcomes produced 96% win or loss rates with 60 to 70 plus qualifiers in the samples. This means 57 to 67 valid winners/losers out of 60 to 70 fulfilling observations.

This report is being refactored and will be available to members when that process is complete. Meanwhile, the data shown below sheds interesting color on 2015. Though there are a low number of observations out of 100+ samples, the methodology we used we feel is highly reliable which makes these outcomes something not to be taken lightly. Ideal turn timing is mid June to mid July.

MCM January Effect Analysis

Market Structure charts for S&P500

As a test of some new post functionality and a public service, we are re-posting the market structure charts in this post for easy viewing...please refer to the previous posts for details

Current Daily Market Structure Projection

Daily Market Structure Projection

Daily Market Strcuture Projection History

Reference Daily Market Structure Projection History as of April 1st, 2015

for May 19th, 2015

Intraday Market Structure Projection for May 19th, 2015

e-Tick Tools

e-Tick Tools – Get inside the market

e-Tick Tools is a proprietary approach and technology that enables an unprecedented and deep evaluation of extreme and emotional behavior in key markets. e-Tick Tools is fundamentally different from most any other analysis, in that it is not designed to analyse a series of prices, but rather analyse market facts, behavior and events. The toolset then represents its detailed analysis in the form key prices and confirmation feedback at key event driven areas of significance. The results are unparalleled and enlightening: The methodology generates relatively few signals/data points but highly relevant and revealing real time feedback. Even on very short term time-frames, the result is deep and unprecedented market clarity.

Get Inside e-Tick Tools

Get Into It Live – Expert Lounge

Not only does e-Tick Tools provide an edge with which to view and interpret the markets, mcm has implemented an expert lounge that interactively brings expert live analysis and feedback together with solid technical analysis by a highly experienced and skilled trader..

Get Into It on your Trading Workstation

e-Tick Tools provides a unique edge with which to view and interpret the markets, understanding that certain traders/firms may require instant accessibility directly within their own facility. mcm is implementing a software distribution that enables e-Tick Tools analysis and directly to your workstation. Please keep in mind that e-Tick Tools and its supporting applications are formidable tools in that they require significant compute resources in order to function properly in real-time. In addition, they require databases to be maintained an updated on an ongoing basis in order to function correctly. These are complex professional tools and have significant and specific requirements and needs to run...please be prepared for a detailed discussion regarding an installation requirements and fact finding so that we can be sure that it is a reasonable fit.

One of the reasons that we implemented a sophisticated web distribution mechanism for this data is because of the complexity of maintaining the supporting databases, data feeds and quality, upgrades and hardware requirements.