Posts

Strong Overnight with Gap Up Probable as expected – Intraday Projections on Track

Yesterday, we posted the daily and weekly MSP, which indicated a down AM session yesterday from Friday's AM. This was met. Today's AM was indicated with UP probability. Further into the week, downside bias is probable into Friday AM. If downside materializes into Friday, as probabilities favor, it could become pronounced.

In the e-Tick-Tools Lounge yesterday afternoon, we were very clear that given the overnight market structure, probabilities favored a strong overnight and likely gap up with what, in likelihood, would likely result in AM high near the cash open - as most probability scenarios are supporting weakness from the 9 to 10 AM area possibly all the way into the close.

Keep in mind this is a Central Banker game time and they are sparing no tricks in their attempts to levitate markets. Market structure timing is forward till the 12th to 14th for a potential turn and any accompanying bounces or rallies into those highs are likely to be event driven or direct Central Bank interventions.

July 7nd, 2015 Intraday Market Structure Projections

July 7th, 2015 Intraday Market Structure Projections

Market Projections Today – Live vs Memorex

As a review of today's AM probabilities here is our "Live" vs "Memorex" analysis. The proposed market structure was Red Projection, which also coincided with timing windows. There are high probabilities for a sizable overnight drop from 2:00 AM high into a 7:00 AM low tomorrow, however, if that were to play out then tomorrow biases much more significantly up and will likely cause trouble for bears,  short-term - something that we will look at with more complete data later.

Stunning triggers from e-Tick-Tools as well - not shown. If anyone is interested message on Twitter or our support page and we can post them. To me, today's triggers were very interesting and prescient.

To me the most interesting thing about all this work is that it beyond totally blows up the feeling of inadequacy that is the underpinning for the concept of "Random Walk" as related to markets. People who have more fear than curiosity are very likely to come up with either one of two things, brilliant advances or total drivel. Which one is more highly valued by our society is most often very hard to tell. But "random walk" does not apply to markets - which are actually highly structured and predictable.

July 1st, 2015 Intraday Market Structure Projections Live vs Memorex

July 1st, 2015 Intraday Market Structure Projections Live vs Memorex

Pushing Towards a Cliff Around 12th/14th – Daily & Weekly MSP

Lots of cross currents and chop. Increasingly poor/aberrant behavior in markets seems to be pushing us into the 12th to 14th cliff discussed in the longer-term market structure projections. All outcomes point to a combustible situation. One of the things to look for is when markets disconnect from structured behavior as this usually indicates a forced changes to market participant behaviors that later turns into a larger market impact. Recently we have had a few days in which daily directional  probabilities were contradicted, they very likely point to this exact type of situation.

One note, if one wished to take the time to review posts and articles here, you can see that even on the day's where daily probabilities were contradicted in MOST everycase, intraday probabilities gave that clue very early and clearly. (The Grid View is great for this and has fast search tools keys at the top of the page) Additionally, e-Tick-Tools emotion analysis made even the most difficult days to understand much clearer. Yesterday, for instance, there was an X-Tick on the opening bar indicating buy capitulation. And at the lows there were a cluster of sell extremes and a capitulatory X-Tick at around  2051 and 12:00 PM...and Accumulation Index (also a form of efficiency and emotion analysis) closed at the high of the day...which have so far led nicely to today's follow on upward movement.

So far this week, market structure has reverted somewhat as discussed below. Looks like a lot of volatility is on deck into next week with a potentially large move up into the week of the 12th to 14th. Additionally, generally, July 4th weekend puts a pause in things. Both this week and next week - momentum peaks on Wed and turns down into the end of the week. This Friday is not projected to be a high volatility day in terms or downside. We will see.

Good luck out there and be careful...longer-term timing approaching. Though this is a dangerous market, it's very easy to get overly bearish (or bullish even) and get chopped up.

July 1st, 2015 Daily & Weekly Market Structure Projections

July 1st, 2015 Daily & Weekly Market Structure Projections

EURO Broken, Breaking and Broke – Greece Plays Its Hand

EURO Broken, Breaking and  Broke

EURO Broken, Breaking, and Broke

The ECB thought they could back the Greek Government and leadership into a corner with no other choice than an insipid self-destruction that would have left them, culpable, maligned and threatened by their own nation. Soon to be replaced by a trinket government installed at the whim of a few EURO bureaucrats (or Neo-Nazis - take your pick).

Greece played it about as well as possible. Knowing that the objective of ECB and Germany was to make sure that no other political administration in the crumbling European Union would ever be willing to commit such an act of defiance and humiliation against central planners. They waited till after markets had closed to announce a referendum and to "stick the finger" to the central planners (see ECB & EU Strategy – Political, Not Practical). During the afternoon on Friday, Greece made overtures but just after the close of the markets they gave no wriggle room to a central bank that thought it owned the outcome of the situation.

This era, characterized by the senseless debt pumping by central planning bureaucrats all over the world, has destroyed many lives and is presently in the process of destroying millions more - which will inevitably be the driving force of more complex conflicts between nations. The fact is that, via side deals and convoluted transactions with the US FED, virtually all sovereign central banks operate US FED policy by proxy. Almost all of them are precariously close to losing control of the leverage they have been so desperate to pretend is a catalyst to growth when in fact it is clearly the opposite (see these charts). IMF and BIS have been projecting wild fantasies regarding Greek growth for years. As it appears, these delusions are influenced by blind deference to the concept that something can be created out of nothing by a few bankers with a "control-P" key. Sadly this is not the situation as so clearly shown in IMAGINARY NUMBERS. With so little real capital available and so much leverage, even a little disruption can have grave implications. The next months and weeks will likely reveal more regarding leverage (more accurately deleveraging) implications.

Leverage - Where are we now?

Leverage - Where are we now?

These crises arising all over the world may be a catharsis for people in the end, but it will be one of the most painful paths possible for rejuvenation. From this perspective, Greece knows they are in pain, it can not get much more intense for them. What you can not pay for does not get paid - so, there is somewhat of a limit. BUT IT CAN GET VERY PAINFUL for debt-pushing central-planners. The implications of huge and contagious CDS & derivatives losses, financial instability and challenges that are all pointed at the feet and minds of central planners (as opposed to indebted governments) is likely to be a trend.

If there is one lesson from Greece, it is while the drug is offered - take it. When the drug causes ill health and death, for the history books, make sure its manufacturers and pushers get the blame. 

Today – Live versus Memorex Projection Analysis

Not much commentary needed. DOW was much more orderly than the SPX but both complied with structure and timing. Additionally, e-Tick-Tools real-time emotion analysis had a terrific day today. Daily AM session to AM session directionality remains precariously up into Monday morning. Monday. however, has a tendency to be a very weak day session day currently - selling from a morning high remains probable. Should be an interesting week next week.

June 26th, 2015 Intraday Market Structure Projection Reconcilliation

June 26th, 2015 Intraday Market Structure Projection Reconcilliation

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

Today – Another Example of Timing & Modal Switching

Timing, Timng Timing...Probability, Probability, Probability

This is a brief post to cover today's activity. Probabilities favored an upside move into around 1:00 pm based on market structure. Ironically, the 5:30 AM timing low, as presented in this morning's 4:30 AM post, did bounce almost 5 points and within 10 minutes of schedule. However, the first signs that market structure was sloppy were the repeated tests of that 5:30 AM low. This in itself is not an issue as market structure should have some room to breath. It did indicate some sloppiness. Sloppiness in this fashion is an early sign of potential loss of edge. Additionally, at 9:15 AM before the cash open, the market broke the 5:30 AM low that severely impacted the positive biased market structure. Clearly, the probability plan as posted in the morning was at risk and likely incorrect.

The implications of such a structural break were clear, timing was still going to be 1:00 PM but odds of 1:00 PM being low increased dramatically. This is one of the reasons that modal decision making is so clean.  The impact of being "wrong" is clear and does not imply a lack of flexibility or capability - but rather just the reverse. There was little reason to attempt to hold to hard and unnecessary indications when clearly "edge" was compromised and risk of adverse or downward bias into 1:00 PM timing increased substantially.

The preferred approach is to wait for high probability timing and then looking for execution potential. NOT trying to out-think the market. Too often, systems developers and traders alike think that it is necessary to do every possible trade. In fact, this causes confusion, risks more errors and does not improve odds or preserve mental capital. Waiting, while difficult, is a very productive risk management method. If probabilities are not greater than normal after all why waste effort or resources till they are. Clear thinking and planning is one of the biggest assets to bring to market interaction. Being "right" is of comparatively much less value.

There were quite a few other edges that occurred today from e-Tick-Tools that were of significant value. Capturing the 1:00 PM long potential and also, understanding that the 10:08 AM high was an area of buyer capitulation. In any case, the objective is to retain clarity and efficiency. Operating at inflection and high probability points relieves much of the over thinking we are all likely to be attracted to. Moreover, most of the time, it can be planned in advance to a decent degree.

Review of Yesterday & MSP Intraday Today

Yesterday's daily market structure probabilities favored a low in the morning 3:00 AM to 6:00 AM and then a significant change in bias from down to up on a daily basis. For us, daily in this case means morning to morning NOT close to close. The low from the Friday-Monday Session occurred at the 5:15 PM Friday futures close. So, from a trading hours perspective - which is how MSP works, we were around 9 hours early. This is more than normal. However, when is known that a significant change is approaching preparedness is warranted, and we were prepared. So, in that regard no significant retest of the Friday low into the AM hours Monday closed the window on downward probabilities and turned to the upside around 3:00 AM.

Interestingly, the most bearish possibility yesterday would have been if a 7:00 AM high were to have occurred and held. However, this was NOT the favored market structure. As 12:00 pm high was the highest probability, and it occurred within 30 minutes. From there, a 3:3o PM cash session low was implied as highest probability, and this also occurred within 30 minutes.

All in all, it is hard to be more accurate. Additionally, however, e-Tick-Tools and Gap-Tools further refined the cash open, indicating very low probabilities of gap fill and high probabilities of a break upward out of the opening range with stop runs triggering against short position - which was met.

Today, a 5:30 am Low would favor outcomes of a 1:00 pm high with pullback/consolidation into the afternoon and close. Probabilities for a negative cash session are not favorable (does not rule "down" out but odds are not favoring). They would best be supported with a 6:00 am high, and that does not appear to be likely.

June 23th, 2015 Intraday Market Structure Projections

June 23th, 2015 Intraday Market Structure Projections

Post-Mortem for Today’s MSP work

Today was unusual for a FED day. Volatility was much higher than normal. However, as can easily be reconciled from the enclosed chart. One can not expect much more prescient, accurate and useful data than what we provided today. Against the crowd and common wisdom that today's FED day morning session would be a breakout and continue with strength into the meeting and high expectations for Janet to say something, anything soothing, probabilities once again win out over macro/rational, emotion or opinion.

One of the issues that we seem to be having that I feel is a discrepancy is the incidence of the post-announcement conference/show and tell, tea and cookies, whatever one wants to call it. This event has added new volatility and timing implications and though we do not like to adjust for historical data and will not make any adjustment, it is interesting to note that the afternoon bounce lasted nearly 1 hour longer and this is not the first time this has occurred. All else is highly accurate with the exception of the post announcement meeting.  We do not feel like these events will be continuing for that much longer as the FED is attempting to use them to sell its story. If it's implausible to sell a story, adding an event to do so is a risk more than a benefit. Therefore, it is most likely that these affairs are not permanent.

Below is our MSP  post-mortem.

June 17th, 2015 FED DAY DATA SET Post-Mortem Intraday Market Structure Projections

June 17th, 2015 FED DAY DATA SET Post-Mortem Intraday Market Structure Projections

Additionally, as was posted via the Twitter Feed in real time - the X-Tick emotional capitulatory Xtreme triggers marked the bottoms and both afternoon tops. In addition they set up some serious emotional baggage at these areas. So, between 2094 and 2097.25 is now an area that a lot of buyers capitulated and lost. Below 2097.25 and especially 2094 is advantage bears because of this. If the market can gather the strength to overcome the emotional energy that was exerted and wasted at these areas then bulls get a shot.

June 17th, 2015 FED DAY Post-Mortem e-Tick-Tools

June 17th, 2015 FED DAY Post-Mortem e-Tick-Tools

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