Monday, October 21, 2013

The Art of Trading

This is such a great title!  I googled it and found that there is actually a website and a book with the same title.  I guess I'm just hoping that if anyone searching for the art of trading will lead them to my blog by accident.

So are we overbought yet?  I hate that term overbought and I'll leave it at that.  We are once again at all time highs on many of the indices specifically the SPX.  Therefore, since we have no price history at these current price levels we look at price and volume at the lower timeframes to look for clues as to where the battle of supply and demand may develop. 

The SPX 15min PnF chart below highlights the range of 1745-1741 and 1721-1715.  Also notice that 1744 had the highest volume transacted for this period.  Is this accumulation or distribution?  We will not know until the range is broken.  Just remember that this is a 15min chart covering a period of two weeks and we looking at these lower timeframes to see the beginnings of a potential larger move in a area that has no previous price history.    

Here is the SPX 15min candlestick chart with the areas we mentioned above. You can see the volume by price confirms the high volume occurring at the highs. 

Below is the SPX daily candlestick chart highlighting that daily prices have been closing on highs on on increased volume which has been clearly bullish for the markets.  Doesn't the market usually move 100pts in under two weeks of trading?   Today's action did see a slight crack in the bullish action.  We had a narrow trading range with a decrease in volume with price closing near the middle of its range.  But why guess where the market is going.  Why not just react according to the breakout of the range of 1745-1741 we highlight above  I'll be watching closely to see if we are topping or ready for another move higher. 

Thanks for reading. 

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