Successful Test?

BarroMetrics Views: Successful Test?

The S&P attained my target zone last night.

Figure 1, the cash, Normalised Volume, shows that as the S&P moved into the zone, we have seen declining volume and range. Figure 2, the E-mini, traditional Market Profile, shows that last night, the E-mini gapped up and stayed within a narrow range. Normally, the two charts would raise the possibility of an Island Reversal opening for the today’s ‘day session’, and I would be looking for shorting opportunities in the London time zone.

Normally…..

But these are not normal times.

My shorting idea comes from range/volume analysis. It will ‘work’ if, and only if, the market assumption,  of a FED rescue being effective, itself is no longer held by the majority of players. Still, there is a sliver lining in this added uncertainty: we should know in the next couple of sessions whether the ‘assumption’ is operating.

  • If the S&P grinds up on low volume and range, we’ll know it is.
  • If declines and volume and range increase, then it’s probable that the assumption has been weakened to the extent that market forces are returning to ‘normal’.

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FIGURE 1 S&P Daily Normalised Volume

Chart through the courtesy of Market Volume

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FIGURE 2 E-mini 30-minute Market Profile

Charts through the courtesy of Market Delta

8 thoughts on “Successful Test?”

  1. Hi Ray
    For this week, should we expect, or take into consideration “quarter-end trade” effects?

    Does AUD/USD currency pair show the “unload the losers”effect?

  2. Hi Paul

    The strongest quarters for ‘window dressing’ are the March and December. So, no, I did not expect to see the quarter-end impact on Friday.

    I don’t understand what you mean by
    unload the losers’ effect in the AUDUSD.

  3. Ray,
    1. Something new to me:
    Why the strongest quarters for ‘window dressing’ are the March and December?

    All the while I tought that mid-year ‘window dressing’ is very important too?!

    2. “unload the losers’ effect” = window dressing
    (http://www.nber.org/papers/w3617)

  4. Hi Paul

    1) If you create a quarterly chart and subtract the closes, you’ll have the data to confirm my findings. Have no idea why.

    2) OK ‘unload losers’ another name for ‘quarterly window dressing’. Thanks for the reference.

  5. Hi Ray,
    1. Million-Dollar question -):
    Is Window Dessing Effects tradable with reasonable profits?

    If so, any webinar course from you, or TRT?

    2. How and what to take into consideration of Window Dessing Effects on trading?

    3. When to start to do so? One week, or two weels … before quarter-end?

  6. Hi Paul

    1) Yes especially the Dec effect. I’d use your normal trading plan rather than rely on some special course.

    2) The usual – current trend (with an awareness that mid-Nov to end Dec tends to be up for US stocks) – zone, setup entry and exit.

    3) For Dec start from around mid-Nov and end Dec 23.

  7. Hi Ray,
    Thanks for your very valuable input.

    How about Forex, Gold, Oil etc?

    Around mid-Nov 2013, it would be very helpful if we could receive emails from you that help your former HOS and other students to recap how to apply what were taught, to trade the Window Dessing Effects.
    ~ Of course, no obligation, just a wish lah! -:)

  8. Hi Paul

    I’ll bear your suggestions in mind.

    The problem with HOS is there are a number of variations – mainly because I was looking for provide a simple plan without the need to buying a full version of Market-Analyst.

    We finally overcame issue when MA provided a cut-down, lower cost version especially for HOS.

    But, no sooner did I arrange that (which allowed for a seamless integration from HOS to Barros Swing) that circumstances beyond my control led to a closing of the school in Singapore. That’s life, I guess.

    Let’s see if I can come up with a solution to implement your great suggestion.

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