Many many new features (and a few fixes) released today. The full update low-down here.
I was off the trading desk and on a holiday this last week, which was very relaxing. Now I have all kinds of catch-up work to do, so going to make this a brief(ish) one today. Go ahead and play the Red Hot Chili Peppers cover or the Stevie Wonder original while you read and the post title will make all the more sense. Plus it’s a great song.
So here we go…
WTI Crude Oil
This last week was the monthly contract roll, which is usually something of a thrill ride and this week had its fair share of hurking and jerking over a $5 range. Looking at the weekly chart I think you have to seriously consider the possibility that WTI is trying in earnest to find an intermediate term bottom here. Not that it always matters for your intraday tactics, but you have to be aware of the higher-time frame, particularly at the recent range edges. To fade or not to fade, that is always the question.
In reality, there are a couple of legitimate ways to see the chart above. First and my favorite is that we’re bottom fishing in the low 50s now. We have 3 consecutive weeks of higher POCs, with this week’s was right around 53.50. This is pretty significant… we just haven’t seen anything like this in quite some while. A base for some further upside has been established, but as always the question is whether we can keep it going given the still-massive oversupply conditions we’re facing. Of course, we’re coming into the summer driving season in North America, so seasonality should start to become something of a factor. Assuming of course the Northeast ever manages to dig out and thaw out.
The other legit way to view the weekly price action above is to see it as just a dead cat bounce and we’re headed for another leg lower, likely back to test the January lows in the 43.50s. Here and now we’re at a pretty critical technical juncture in the WTI market in my view. So… dead cat bounce or bottom found? At this point I’m favoring the “bottom fishing” view simply because it’s clear that buyers are seeing value in this range of prices. At the end of the day, it’s all about value.
So looking at the week, I think Thursday and Friday are the most interesting days to examine:
Merged, Thursday and Friday (left) provide a somewhat balanced profile. Apart, right, we have a reasonably balanced Thursday and a very unbalanced Friday with both a very, very, poor high and low. However, we did achieve a higher value area. This is a tell for Monday, I’m thinking, and again the merged Thursday/Friday auction is a little out of balance in a bullish way. Completing/balancing this late-week action would mean a test of a well-established area of balance which has a bottom in the 52.90s. If the bulls are able to crack 53.00 early in the week it would not be unreasonable at all to expect a rapid test of the weekly high around 55. Above that 53 area and there may be some significant buys stops for the popping and given the risk on undercurrent of last week, as nuts as it may sound, a test of the 60 handle could be in the cards this week or next. It may not stick, but a test like this soon is not out of the question given the recent ranges. Looking the other way, should we see selling with buyers failing to defend the 49.50s I’d expect higher time frame support in the 46s. Again this expectations is based on the evidence – for the last several weeks buyers are voting on the value at these prices with their wallets. Should buyers fail to materialize there, I’ll almost certainly be targeting the lows in the 43s for a second test and potentially a double bottom. Through that and… well… let’s cross that bridge when it’s in front of us.
S & P 500
Without a doubt, the charts are shouting risk on in the senior US equity indexes. In the ES we built a pretty convincing area of balance/acceptance around 2094 and the shot through the 2100 ceiling with a mighty crack:
This push left an area of singles (highlighted above) behind, and given the time and volume in the early week balance, in my view it’s most constructive the see the area above the singles as a new, incomplete auction. I’m going with that thesis then unless we see something contradictory from Asia and the EU overnight tonight. Save that, I’m expecting to see this nascent auction to provide us with a balanced target test of the 2015 area Monday. Of course, you can’t discount the “Greek factor” in Friday’s price action, and as is so often the case, the ES may want to re-test area where price took off very, very soon. In this particular case, I would expect a check and repair of the singles (shown above) around 2100 again during regular trading hours on Monday and even down to the balance area POC around the 94-95 handle. Should buyers fail to provide support for this region it’s not unreasonable in my view to expect a quick trip to the Friday lows around 2082. The bottom line is that Friday’s profile is an ugly, skinny trend auction example and it needs some fix-up. If we test higher without addressing the structural issues in Friday’s auction, I’ll likely view this is a head fake, particularly if the overall internals are showing anything but continued exuberance. The reality is that this structure will be repaired, it always is, it’s just a matter of when. So again, let’s take it one step at a time.
Trade ’em well this week…
I sense something; a presence I’ve not felt since…
–Darth Vader, Star Wars Episode IV
I don’t know who or what it is yet, but I think it’s there. I’m not even sure what or who it is matters so much as what it’s bringing with it. Or maybe what I’m feeling is the lack of something expected but missing.
Stay with me…
Let’s Talk Spoos
A couple weeks ago after the spectacular #santarally, the SPX looked poised to resume its sensible, inevitable upward march in the usual position, the upper channel. But guess what? It didn’t:
Instead, it expressed enormous ambivalence, retreating to and retracing a large area of previously well-explored prices between 2090 and 2040 (left, above). The range between these zones was so well explored that the volume structure left behind is remarkably thick and indistinct. These are two attributes that the ES/SPX rarely ascribe to the same region.
So the 2100 dollar target question is why? Why did the market choose to calmly retreat to this region? We’ve been here several times before recently. This region, while lower, is only a couple points off the ATHs. And because we’ve been here so many times recently it’s pretty easy to rationalize this as “safe.” But to me there are now some subtle causes for concern if your primary thesis is “higher.”
Let’s start with the big doji candle left on Friday by the SPX, shown above. Next we have my momentum indicators either parked in the middle or edging down. This is an oddly and vaguely uncomfortable neutral position given the battle royale of buying (and selling) just a couple weeks past. If we look at that same chart but with the ES, things look a bit less ambivalent and weaker:
Then there’s that pesky gap on the RTH charts in the 2020 region (SPX and ES) that does not appear on the daily (Globex) charts. But as we know, the vast volume is cast in the equities RTH hours and anything which happens in the ES outside of that time can be easily disregarded, run over and crushed by RTH volume. In other words, there has been enough entrancement of this gap area above 2020 to seriously consider whether the area circled above is turning into an island top, which is a well-known reversal pattern.
Now before hitting the bid in a big way, I should bring up some mitigating (confounding, even) factors in the way this chart developed. First, very plausibly, the down move could have been sellers taking advantage of thin volume and the region of non-scary prices in order to shed some overweight positions and not grab too much attention. It was a very orderly, controlled slide lower over a couple days which indicates some long term players simply squaring the books around the new year. If this is indeed the case, it should already have the BTFD-ippers salivating and I’d expect:
- We see a measure of strength from MOOs right out of the gate
- A test lower and a more powerful afternoon bounce
- A trend down day taking us down to a point where we no longer have to wonder whether this is an island top
At this point, for early in the week, I am favoring scenario 2 followed by scenario 3. Why? Well I would be remiss not consider the seasonality precedent for the situation we see ourselves in now (via Quantifiable Edges), where there are biggish down days between Christmas and New Year-ish:
At this point I think scenario 3 above is plausible given the charts, I just think it’s better set up just a little later in the week. As always with the SPX, you really have to think twice, maybe three times, before you get bearish. You have to have really good technical and fundamental reasons (and often a few 40 point red candles) for being bearish on US large caps for more than a day or two in this environment. Bears just get mercilessly pummeled with soap bars in sacks every time. The proof is right there in the charts.
That said, on the downside in the ES, the levels to watch for a test lower – below the 2050 area – would be 2043 Friday VAL, 2038, 2034 and the oh-so-critical 2028 Alamo area. This has been a biggie for weeks on end, and if it breaks there is almost no doubt in my mind we’ll close this candle gap and take out the open/naked gap at 2008. This 2000 region is the next prominent area of support and I imagine the market will pause and breathe a little should we run down that far.
If Team BTFD is ready for action, the 2050 area is an important psychological price as well as the lower bound of the December 31 range. This is the first key hurdle, and given where we are now we could easily jump over it overnight and test it early Monday (something like scenario 2 above). If it holds we have we have the 2055 area as a rotational target. But from a structural perspective the 2060 HVA area is more important. What happens there, should we get there, is critical to my decision making for next steps. There are a few minor levels in between I’ll no doubt tweet if they become relevant, but the 2076 area is next critical area for bulls to bust to get to 2100.
Now for a couple macro things I find kind of unsettling at the moment (force tremors). First, NYSE margin debt seems to have peaked and backed off. This means that bulls have buying power if they want it. But margin debt also tends to peak and roll off prior to market tops. Also, the jokers on CNBC have been saying for a couple weeks now they expect multiple expansion and another 8-10% positive year in the S&P. This sends off alarm bells in my head for a bunch of reasons. It can mean they are already overweight large caps and getting low on dry powder. They need the little guys to keep it marching up with fund inflows and raw speculation.
Of course I understand the exceptionally bullish monetary situation, but this week I am having an increasingly hard time squaring that view what could happen as the cheap oil chickens come home to roost, the message the massive moves of the USD are trying to send, and some others I won’t mention. I just think the talking heads are purposefully (some idiotically?) overly sanguine for show and tell time on camera, trying to keep the fear of missing out sharp in the minds of the retail cohort. Cognitive dissonance. It’s what’s for breakfast all week, methinks.
Personally, I’d love to see the return of volatility to the ES. Not Armageddon volatility. But I tend to do my best trading when volume’s high and the rotations abusively powerful. It just fits my style of intraday trading.
Oh, and speaking of cheap oil…
A Tale of Grease and Two Gasses
The energy complex is still just weak, weak, weak on the weeklies:
For the last 3 weeks, every one of them opened higher and closed lower. Friday trade, shown in blue on all the above charts, is at the bottom. I don’t trade Natty Gas or RBOB, but there was a bounce in NG in Friday that shouldn’t go unnoticed. Which could be an interesting implication, or only a dead cat bounce. It’s just been ugly, ugly, ugly. As we all know, NG is a big companion product of domestic oil producers and it’s been in an oversupply situation for some time. In fact, I remember reading not long ago that about 50% of all the gas produced is just burned at the top of stacks because they have to remove it to get the oil and there’s just no demand for the excess supply. RBOB is of course a cracked derivative of the raw crude, but I digress.
What I really do care about is WTI. What I think is the key pattern to watch in Sunday’s overnight/London session and Monday is this big ol’ descending wedge CL has jammed itself into over the last week. This is a bullish pattern. That’s not to say it will turn out this way, but the holiday week volume was actually pretty close to normal. And in fact, even as the week progressed and volume increased, the range decreased and the rotations sharpened. Many an oil trader were griping about algos and bots on Friday, but what it really means is that there is a buying presence here which is catching up (or trying to) and match up to the relentless selling of months past:
Note the buying tails on the candles at the bottom of the range in the last two sessions. This range compression is what’s starting to piss both sides of this trade off, IMO. Everything is tightening, and over a longer time frame that we’ve seen recently, and this may be a character change signal. At least in the short term. I think $50 is an important psychological price for a whole bunch of reasons, and I think it’s very reasonable for someone to try to floor it at or near there. Will it work? Given the supply/demand picture that has emerged over the weeks I have to say I doubt it.
But we’re really only a couple explosions or voluntary twists of a big pipe valve away from the mother of all supply-disrupting short squeezes. Not saying I am expecting anything this dramatic, just saying these kinds of threats always loom over the energy market. But what is even rarer than credible supply disruption threats is to have to oil market so lopsided. At some point low price will start to tip over the supply dominoes… but that will take time. Unless any supply disruption is caused by force majeure, we’ll know it as it manifests and can plan accordingly. No need to get ahead of ourselves on this one. So for now, I’m taking this trade one day at a time.
Speaking of, I mentioned my specific expectations for Sunday/Monday on Twitter.
It’s setting up to be a fun and (hopefully) profitable week if you can swallow the dissonance. Trade ’em well…
Listen up cowpokes because it’s on. Again!
We don’t do this but once in a blue moon. So why now? Well, recently we looked into the night sky and that big bright orb circling our planet had a distinctly azure tint. Or it could’ve been the bourbon. Can’t remember. Anyway the point is we’re offering the best deals on memberships you’ll to see in quite a spell.
So grab your rope and toss your lasso around these deals before they get away. Because after December 7th, they’re gone for good….
[dropcap1]J[/dropcap1]ust a quick note to let you know that if you are one of the many who have been able to successfully install the Acme Volume Profile Pack 4.0.4 update, then this post isn’t for you. ;-}
However, if you are one of the handful of unlucky Ranchers (a nickname I just made up right here on the spot) who see an error like this when you try to install it…
… then chances are you also already have some version of either the Acme Market Internals Pack, the Acme Trend Analysis Pack or both already installed. Recent versions of these packs share a tiny amount of code, so NinjaTrader sometimes seems to think that the Acme Volume Profile Pack is already installed. Well, technically, it’s right. Mostly. More or less. Kind of.
- Download the updated packs linked above.
- Remove either or both of the packs linked above if you have them installed.
- Shut down and restart NinjaTrader.
- Import the updated Acme Market Internals Pack and/or the updated Acme Trend Analysis Pack.
- Import the Acme Volume Profile Pack 4.0.4
Again a big tip o’ the hat to all of you who helped suss out the bid/ask issues this week. A bunch of us on the #ole34 Twitter stream compared the Acme Volume Impression Pack against several other platforms and it came up a winner. Or at least a tie. Alright, it matched. That’s a win in my book, anyway. 😉
One small issue remained after yesterday’s update, though. If you were using the AVI on an RTH chart but connected to your provider and pulling live data (during the ES/NQ Globex session, for example) after midnight local time the AVI would make one really tall bar out of all the data between midnight and the start of RTH.
I fixed this issue and verified all is well on RTH and ETH charts now. Muchas gracias to all for the patience and help. This truly was a community effort.
Grab it here… and as always, trade ’em well.
P.S. I also added a Version property to the indicator in the Misc section. I’ll be adding this same Version property it to everything Acme going forward. Should help with trouble shooting, etc.
It’s been an interesting day. Long story that is still kind of long… when dealing with bid, ask and tick data there are a couple of kinds of channels in NinjaTrader 7. There are also 3 NinjaTrader data modes: historical; market replay; and live. Live and market replay are supposed to act the same from the point of view of charts and indicators.
But they don’t.
Or not exactly. Not on both channels. One correctly correlates tick, bid and ask data in live mode. The other channel – the one the Acme Volume Impression Pack (AVI) was using with live data in bid/ask mode – has serious race conditions in the bid, ask and tick streams and sooner or later would produce wild buy/sell evaluation results. When on live data, that is. Market replay made consistently correct AVI charts on this same channel. Ugh.
Anyway, several of you who use bid/ask mode have noticed differences when comparing to other platform charts of this ilk with live data. Turns out the above issue was the cause, and because the race conditions were not present during market replay, that made it pretty difficult to isolate. Bottom line is that I believe the situation should be resolved with this version.
I had to make one change in bid/ask mode behavior, though. Previously the AVI painted “0 x 0” for bar levels with historical data and it also was able to build the session ladder and profile. Unfortunately, this is not possible now in bid/ask mode. Doing this would require using both channels I describe above. There really is no reliable way I am aware of to mix the data in both channels across all the modes in a single chart session. So you’ll see some blank charts (assuming you have your bars transparent or nearly so) until the AVI begins receiving live data in bid/ask mode.
If you are an up/downticker, like me, your universe remains the same.
A huge thank-you to everyone who helped triangulate the issue with screen shots and detailed descriptions of what you saw.
Well, remember that tiny tick size issue I mentioned in the update post just yesterday afternoon? It only took one overnight session for the loyal Acme FX traders to run square into it.
Please accept my apologies for the churn. Looks like I will be adding FX products to my testing checklist from now on. ;-}
Grab the updated packs at the links above. Trade ’em well…
Depends. Sometimes not much.
Though if you are a registered trademark owner the stakes can be higher. Why am I telling you this now? A few days ago when I released a new Acme pack I inadvertently named it something that I should not have.
We’re talking about the pack formerly known as the Acme Volume F00tprint. I was contacted today by the CEO of MarketDelta LLC and was advised that the term Footprint® is a registered trademark of MarketDelta.
I have no interest in creating confusion between Rancho Dinero/Acme and MarketDelta, nor in infringing on their trademark, so from here forward the software in question will be known as the Acme Volume Impression Pack.
The name may have changed, but the song remains the same.
Trade ’em well, amigos.
One small fix and one small change to 3.0.3:
- Fix: changed the description for Style – Max Font Size setting to something that makes sense in English.
- New Feature: For a certain member who make a good case for a size filter, your ship has come in.
Here is an example with all prints under 99 filtered out:
… and the filter setting:
Once again, you asked for it. You got it. You can grab it here.