39 replies to this topic

[MoneyFriend]

MF, I don't understand why you think the market will go towards those volume bars. Perhaps you have some past corelative evidence?

It's called "filling in the singles", MP folk are familiar with the phenomenon.

I've gone back and looked at about 100 years to back up my claims. An easy thing to do is go in to bigcharts.com and play with the custom dates to see how the profiles morph from phase to phase. I'd share all that research with you but a report isn't prepared for that atm. What I suggest doing is entering the start date from the day the bull topped out, and then stepping through the end dates and seeing how it morphs. You may want to read up on market profile too if you are not that familiar.

Here's my comparison between the last bear and now though... the search is giving me issues atm or I'd just link you to where I posted this before about a month ago.
In my research this is a very common profile phenomenon in bear to bull transitions, they almost all look like this. An extension down away from the poc, a secondary smaller and lower poc is formed, that lower poc builds, and then price eventually trades above it and goes up to fill in any valleys above.

 then_and_now.swf   791.91KB   129 downloads

Edited by MoneyFriend, 06 June 2009 - 03:07 PM.

[spielchekr]

There's more volume up there than you think.

Going back a bit too far for to be useful imo, but to each their own. Using that many years and expecting it to work for support and resistance is presuming that most of the holders from years past are still holding or interested in defending those levels, imo. I think it's safe to say that the volume profile from last year or 2 reflects well enough where vested interest is, don't feel as confident that 4+ years back is relevant to s/r.

Either way those 5 year profiles you posted look bullish to me as well, just not as bullish. The capital P on the Nasdaq is a particularly bullish profile.

Again, I'm suggesting taking a look at the Nasdaq. That's where the volume was for the price range above us. I think it's valid to go back those years because the event that broke below the heaviest volume of two and a half years worth of accumulation is still recent enough, and only took about three weeks. The tiny volume for those weeks says most did not make it out. And as for dead air, it's the world's best insulator.



Also, one can work around Stockchart's price by volume limitations. Just set two charts side by side, set them for linear, and scale the y-axis prices to match. I could have inserted a third chart for June 07 through September 08 to get all of the volume bar widths the same, but I don't it's necessary work here.

[MoneyFriend]

Again, I'm suggesting taking a look at the Nasdaq. That's where the volume was for the price range above us. I think it's valid to go back those years because the event that broke below the heaviest volume of two and a half years worth of accumulation is still recent enough, and only took about three weeks. The tiny volume for those weeks says most did not make it out. And as for dead air, it's the world's best insulator.

Also, one can work around Stockchart's price by volume limitations. Just set two charts side by side, set them for linear, and scale the y-axis prices to match. I could have inserted a third chart for June 07 through September 08 to get all of the volume bar widths the same, but I don't it's necessary work here.

Exactly it happened in 3 insane weeks, iow there is little volume in that zone to act as resistance, if most did not make it out there, they either folded somewhere below or are still holding. It could be an insulator, if the overall market just decides that it is too far from value, or the old bag holders add selling pressure by deciding to finally get out at break even, but I'm thinking based on the momentum we are seeing, that it's much more likely a conductant than an insulator at this point in time, and any old hands will keep on holding until the much more concrete potential resistance is reached near the 2000's aka old value area.

Thanks for the stockcharts tip.

Edited by MoneyFriend, 06 June 2009 - 08:18 PM.

[spielchekr]

We're coiling into this perfectly symmetrical triangle at the epicenter of all volume. You're free to dispute that legacy volume is relevant, if you like. But it kinda looks like we've driven off the shoulder of this volume superhighway.

[MoneyFriend]

We're coiling into this perfectly symmetrical triangle at the epicenter of all volume. You're free to dispute that legacy volume is relevant, if you like. But it kinda looks like we've driven off the shoulder of this volume superhighway.

If you want my interpretation of something that long term, well, that would be the POC we are in now, which means probabilities say we stay or trade around these levels for some time. Not bearish.

[CLK]

This is what I'm touching on here Russ, All the dow needs to Dow is hold up this month and it is a raging buy signal imo, as it's monthly mean would have made a higher high.

MoneyFriend,

I like that chart alot, if you can, how is it set up ?

Thanks for posting anyway.

[spielchekr]

If you want my interpretation of something that long term, well, that would be the POC we are in now, which means probabilities say we stay or trade around these levels for some time. Not bearish.

Taking the price channel boundaries I established in my last chart, zooming POC time frame to 2000 as you did in this link then and now. I grant you, the bars are calibrated thickly.




Here's more refinement on the bar calibrations by using BigCharts, but for QQQQ (switching to proxy 'cause BigCharts doesn't appear to have all the volume data for NDX).




Here's a three-year zoom:




And here's the two-year air pocket view:




So yes, there's a little air bubble above us in NDX and QQQQ. But blowing below such a long-established point of control and retesting it (along with the broken price channel) doesn't seem "not bearish" to me. Although we obviously disagree, I do appreciate that you've taken time to respond. Nothing personal at all here... just some good sparring exercise. Keeps us all sharp. Could be that the big Dow air pocket gets supplied by rotation away from the Nas POC resistance, which is much closer at hand... wss. Best to you.

[MoneyFriend]

Here's more refinement on the bar calibrations by using BigCharts, but for QQQQ (switching to proxy 'cause BigCharts doesn't appear to have all the volume data for NDX).

In all my time with market profile this is the least threatening distribution I've seen on such a long term chart. It's nearly a perfect gaussian and it's not considered bearish, it's considered neutral in basic profile terms, it suggests that price is accepted at value right now and that the upper and lower extremes are unfair prices. It also suggests highly that price goes to test the POC at 38, which is about 1550 on the NQ. If that test fails miserably there, then it becomes more bearish. But this is basically telling me that probabilities suggest 1550 will be tested very soon. I'm guessing an initial test of 1550 is met with selling, but we have to wait and see how much selling. I'm not sure how much you know about MP, and I don't want to come off as patronizing, so I'm keeping this brief for now. The handbook CBOT used to have for free on their site is good, but the stuff by Dalton is the most revealing imo. Also the Q's or any ETF I think are a bad proxy for something so long term,why not use COMP instead on bigcharts? Also I would not be using Monthly data, Daily is what you want on bigcharts as it will give you much more accurate detail, Monthly will look off because it is only giving the volume by price wherever each month closed. Appreciate the work you have posted here and I know it's not personal. I've enjoyed your other work before.

Edited by MoneyFriend, 07 June 2009 - 12:13 PM.

[donmat]

From what I've read Market Profile is used to determine value areas for the next trading day. I don't think it was ever meant to be used for long term analysis.

[MoneyFriend]

From what I've read Market Profile is used to determine value areas for the next trading day. I don't think it was ever meant to be used for long term analysis.

Every book I've read on MP goes in to detailing it's long term use at some point. My personal TA tastes don't go beyond using it for 2/3 years span. Either way I think it works wonderfully for long term and short term.
I was shooting in the dark with trading before I learned MP.
What have you read donmat?

I've read these:
CBOT MP Handbook
Markets in Profile - Dalton
Mind Over Markets - Dalton
Stiedlmayer on Markets

All are recommended but Markets in Profile is the one I would suggest if you want the most concise work imo.

Edited by MoneyFriend, 07 June 2009 - 01:43 PM.