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| 2333.50 | ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day. / Limit up level |
|---|---|
| 2290.75 | RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. High / Gap fill level |
| 2250.00 | VAHValue Area High |
| 2231.00 | POCPoint of Control, also known as the "fairest price to do business". It is the price level in the /ES where the greatest amount of volume in the prior RTH session traded. ShadowTrader measures the POC using volume but the traditional way is to mark off the widest point of the day's distribution where the most TPO's printed going across from left to right, indicating that that was the price where the most time was spent. It's important to pay attention to both the volume POC and the TPO POC. |
Lock limit up at the ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day. which is not surprising to me at all. I alluded to this multiple times yesterday in WPT texts and also on my appearance on the SquawkBox with Scott yesterday afternoon. It just didn’t feel right to be short anymore. Now, does that mean that it won’t feel right to be short again? Absolutely not. I’m a short term trader who exploits short term thinking and moves. The tone could easily change before the closing bell today and the bias will be back to down.
This morning we are trading on a true gapThere is a lot of discussion as to what constitutes a gap. Is it measured to the prior day's close, or to the prior day's high or low. Here at ShadowTrader we believe that it is always and only to a prior day's high or low, thus creating a true gap or space on the chart between one day and the next. Thus a true gap is one that has price opening completely outside of the prior day's range (either above the high or below the low) and anything else is just a gap that has far less import. As a gap is a "reordering of thinking", only a true gap really changes the tone and creates opportunity to trade early rather than later. and thus gap rulesGuidelines to follow on any day that the futures open outside of the prior day's RTH range. Only opening outside of range is a true gap and puts gap rules in play. 1. Go with all gaps that don't fill right away. This means that if early trade doesn't start to correct the imbalance, then prices will probably move in the direction of the gap. 2. Larger gaps can often fail to fill on the first day or may fill only partially. 3. If the gap fills (meaning the prior day's RTH high is touched on a gap up or the prior day's RTH low is touched on a gap down) and value cannot get to at least overlapping, then the odds of a late day rally (on a gap up) or late day selloff (on a gap down) increase. 4. Gaps of larger than $20 in the /ES are difficult to trade and should be avoided early in the day as t... are in play. This is somewhat in contrast to what we’ve been seeing recently which has been extremely large gaps that still cannot exit the prior day’s range. Overnight inventoryA way of measuring overnight activity in the futures market by just noting how much of the overnight activity happens to fall above the prior day's settlement value (4:15pm EST close) and how much falls below. If more activity is above the settlement, then overnight inventory is said to be net long. If more is below, then it is said to be net short. If all of the overnight activity is above the settlement, then it is said to be 100% net long. If all of the activity is below the settlement then it is said to be 100% net short. The overnight inventory situation matters most and has the most impact on early trade when it is skewed 100% in either direction because when the imbalance is very large like that then the odds of an early correction increase greatly. This is due to the fact that most... is close enough to 100% net long to call it that and treat it accordingly.
Our focus this morning should be obvious. Will newer buyers come in at the bell to follow on with the overnight players and take the market higher than the ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day.? I think anything less than that is a disappointment for the bulls and leads to more status quo. You’ll note that the Key Levels above bring in VAHValue Area High and POCPoint of Control, also known as the "fairest price to do business". It is the price level in the /ES where the greatest amount of volume in the prior RTH session traded. ShadowTrader measures the POC using volume but the traditional way is to mark off the widest point of the day's distribution where the most TPO's printed going across from left to right, indicating that that was the price where the most time was spent. It's important to pay attention to both the volume POC and the TPO POC. which we haven’t seen in awhile. This is by design as once you have a true gapThere is a lot of discussion as to what constitutes a gap. Is it measured to the prior day's close, or to the prior day's high or low. Here at ShadowTrader we believe that it is always and only to a prior day's high or low, thus creating a true gap or space on the chart between one day and the next. Thus a true gap is one that has price opening completely outside of the prior day's range (either above the high or below the low) and anything else is just a gap that has far less import. As a gap is a "reordering of thinking", only a true gap really changes the tone and creates opportunity to trade early rather than later., you need to monitor for how deeply into the prior day’s range you do to gauge the strength of the counter trend move. If the gap fills, look to VAHValue Area High next, then to POCPoint of Control, also known as the "fairest price to do business". It is the price level in the /ES where the greatest amount of volume in the prior RTH session traded. ShadowTrader measures the POC using volume but the traditional way is to mark off the widest point of the day's distribution where the most TPO's printed going across from left to right, indicating that that was the price where the most time was spent. It's important to pay attention to both the volume POC and the TPO POC.. These are the signposts that you often hear me speak about.
As the day moves on, pay close attention to where value develops. We have not had value higher in some time. Breakaway to the upside with no overlap is the most bullish outcome while overlapping to up or unchanged is far less bullish.
Scenarios
- Early trade fails to take out the ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day. and moves lower. This can happen very early, which means you short the low of the first 1 minute bar, or later as futures rally a bit then stumble back towards the open, in which case you short the cross back through the open. Your stop would be above LODLow of Day in either case and you would be targeting the RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. high for the gap fill. Always be cognizant that larger gaps often fill only partially.
- There is little evidence of corrective activity and an early drive gets to the ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day. and has momentum, tempoProbably one of the most important and yet overlooked concepts in the market. The tempo is simply the ‘speed’ at which the market is moving. This is also referred to as confidence. Slow tempo is typical of range bound days where there is lots of responsive activity. Fast tempo occurs when there is initiating activity, and market is breaking out of a range. This is not to say that the market can’t have fast tempo on days when it is rotational or moving between the extremes of a value area. It certainly can. Effective intraday futures trading involves gauging the tempo and knowing that opportunities are fewer and smaller when the tempo is slow. See S.O.H., and internalsInternals refers to “market internals” and is a blanket term to collectively describe the advance decline, breadth, tick and cumulative tick. to support a move higher. The ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day. could be used as a breakout level for a long trade. Target is not specific but take the current level of volatility into account and monitor for continuation.
- A gap fill at the RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. High would be a buy today given the correct context. This is a fantastic R/R trade that allows traders to have a tight stop and large target. Keep it in mind if the gap fils
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