squeeze gap

Recent downside momentum in the markets was broken today with a wide gap up, triggering stops overhead.  Where did price resort back to?

SPY returned to the 50% retracement as measured High to Low (11/9-11/16), closing right above the 20-day

While the gap up (from the PDC to today's Open) couldn't quite extend to the 100% mark (came within 7-cents):

weekly SPY

The week ending 11/05 the SPY printed a large momentum bar (teal candle).

Here is how the mipoint (blue horizontal line) acted as a pivot for the following 8-days where 100% of the momentum impulse has been retraced.
Also on the chart below (green horizontal) is the midpoint (as measured from the Close on 11/03 to the Open of 11/04) of the impulse gap up.  Support becomes Resistance:

The Original Amateur Hour

Down and Down she goes, and where she stops nobody knows:

midpoint overhead

Yesterday the SPY and OXY printed 2x bars

SPY- In the image below, the teal bar signifies a real body that is at least 2-times greater than the previous bar.   Incidentally, the purple line is the LML of a long-term pitchfork.

intra-day price didn't quite reach the previous real body midpoint, but Oh so close:

Similar story with OXY

intraday, ALMOST tagged the 50% midpoint, triple top within a penny:

no indicator day

Trading off of a momentum indicator on a trend day like today would have you screwed six ways to Sunday.  Here's what buying a momentum divergence left you with today on the 15-min:

While on the 5-minute one would be sliced and diced:

  So, on a day when Advancers/Decliners are severely out of balance, the TICK starts of with -1000 and can barely get back to zero, and the rest of the breadth indicators are flashing sell, just turn the squiggly line indicator off.
What were some reasonable targets to aim for?
Fib Retracement as measured between the PDC and today's Open had a great proportion:

and the Fib retracement off of the PDH & PDL had similar results

SPY fork update

How about that pitchfork!?  An excruciating grind up and a quick profit-taking dump down.  Kind of like Nov.-Dec. '09 & April-May '10.  Rinse and repeat.  Not for nothing, but price surpassed the Lower Median Line by $0.06 before bouncing.

midpoints

Here are a couple of 2x-bar midpoints that were tested today. 
11/10 RIMM showed a 2x momentum bar

This morning price gaped down within $0.03 of this midpoint and bounced strongly, filling it's gap within 5-minutes.  Once the intra-day momentum bar (second 5-minute candle) went beyond it's 50% midpoint, it became apparent that the opening drive was just a short covering.  Price returned to this 11/10 midpoint and measured a 50% extension beyond it:

V exhibited a 2x momentum bar back in October, however, it was already tested once before:

This morning we gaped down and an attempted gap-fill failed, which coincided with the 10/13 midpoint.

Most recently, OXY had a strong session 3-days ago

This morning a gap-down lost momentum right around this midpoint level, leading to a short shakeout

current channel

perhaps I'm drunk...

...but I just have to share some charts employing a very simple indicator; the Highest and Lowest Close of the last 4-bars.  I started watching this paintbar on the 3-minute using the Highest/Lowest Close of the last 7-bars, but the 5-minute reflects similar effects and has a more comfortable tempo.  Used in conjuction with Support/Resistance levels, this can indicate some really great trade potential, while referring to previous swing highs/lows for stop placement.
  The following charts have White and Yellow paintbars.  A white bar indicates the Highest Close of the last 4-bars (HC4).  A yellow paintbar indicates the Lowest Close of the last 4-bars (LC4).

The Obvious
     The HC4 & LC4 indicate the highest and lowest close of the last 20-minutes (on a 5-minute chart).

  Working on an intraday timeframe this paintbar often indicates high probability turning points within our daily market stages.  Here is APA over the last 6-days

Here is HES over the last 6-days

RIMM over the last 6-days

p.s. In times of trend when one is looking for a dip to buy, oftentimes the LC4 (in times of long entries) can be a good fade candle, and the opposite for HC4.

Monday SPY intraday

A look at the SPY for Monday 11.15
Price retraced 61.8% between the high of 11.11 and the low of Friday 11.12

  So, we gaped up this morning (upward momentum).  Drawing a Fib. retracement line off of the close on Friday and today's Open what do we see:

- Following the gap up momentum, price wicked the 50% retracement before returning to the Open.  NOTE: The above chart uses the closing time of 4:15 EST.  Using a closing time of 4EST  we get a nearly 100% retracement after the open and a 100% extension, the proportions of momentum and it's extension do not change).
- As price returned to the open the upward gap momentum carried us to a 50% extension.

The 15-min chart shows two strong bars early in the day (the green bar being a 2x-bar).  Notice the midpoint of these bars and their respective Support/Resistance qualities.

Using the squiggly line tool, we only really got one signal out of it today, that being a sell divergence (which would have been a test to sit through).

using momentum

  An issue I've always had when in a trade, or looking to enter a trade,  was trying to project where my price target should be.  I'm flipping through daily charts, looking at wicks, moving to 30min chart bollinger bands, getting a target number in mind and then wondering, "Why'd price stop there and not my arbitrary target?"
One of the easier methods I have found for projecting a target (for at least half position) is simply projecting a Fib. Retracement off of the most recent momentum impulse and using the 50% extension as my "at least" target.  In other words, a measured move, dur!

Momentum Impulse
     A movement in price that exhibits a wider range in a shorter period of time.  Of course this is relative to the issue and timeframe you're looking at, but it should be obvious when you look at a chart and see big versus not so big bars, and sideways versus linear movement.  Especially obvious in the opening session where there are gaps with continuation or rejection.

Here are two examples from today:

APA gaped up this morning and within 10-min retraced half of the Close-Open gap range.  Normally I would look for support from this 50% level, so a failure can tip off weakness.

The 50% retracement  failure led to a gap fill, giving us a momentum leg.  I'll then measure these 3 candles, as it represents momentum.

  At this point I wait and see how/if/where price is going to retrace this momentum impulse.  APA showed a wick rejection close to the 50% retracement (an excellent confirming signal!) so I'm thinking short and looking for any further retrace testing.  What followed was increasingly narrow price contraction before a failure of the lows.
  My primary target = 50% extension off of the initial impulse.  Afterwards you can judge strength of price for potential further downside.  As you can see, each extension level (50% and 100%) was sliced through on a solid bar, while the 150% extension was wicked and followed by short covering.

RIMM had a similar open this morning.  Momentum on the gap up, but the 50% failed to hold any support, instead showed strong downside momentum.

  Following this downside momentum price wicked no more than 38% of it's previous  momentum.  Price then broke down, hitting our primary and secondary targets (50% & 100% extensions), though instead of slicing through them (as they did in APA) they were wicked (not necessarily a sign of continuing momentum).

So, once we can pinpoint momentum we can at least determine a primary target and size our position accordingly.

As an aside:
   I've noticed that when you have strong directional momentum that isn't immediately tested (like in the APA chart where we had a wick test near the 50% almost immediately) then price tends to drift back in that direction for a test.  Case in point, AGU today, notice how we have 15-minutes of downward price momentum and zero testing of the previous bar's range.  Once price found support it then drifted up to test the range that it previously sliced through:

basic setups

Simple basic setups in the SPY using the 3/10 macd:

MON

Thursday MON printed a 2x bar (real body 2x or more greater than the previous real body), and on Friday it demonstrated how well price respected the 50% retracement level as a pivot.  I'm still on the fence of where to draw the Fib lines from (either the extreme High/Low, or from Open to Close, it may just depend on how much wick is involved in the candle).
Going back a few days, MON had a momentum run and while price has yet to close lower than 50% of that momentum run's range, it does keep dipping lower.

The 50% retracement as measured from the High to Low framed price nicely on Friday, bouncing from it before failing it.  The fib lines drawn from the Open to Close put the 50% line 13-cents higher.

Also worth noting:  Price gaped down and had a weak rally attempt to fill this gap wherein price failed the Open (yellow line), the return test of the Open was an Ideal short entry.  Meanwhile, as price flirted with the previous day's 50% retracement we got a basing pattern with very little upward testing (aside from the final stop sweep before trading lower)

weekly harami

SPY weekly chart showing harami reversal candle pattern.  Not highly reliable, but perhaps a warning.  Also, a potential 2b top if next week closes below $119 area.

And we're back within the channel between the pitchfork median line and the 20MA.

playback of the week

Working on the quality at the moment

It's important also what came before this move....more momentum:

Important aspects to take away from this:
How price reacts within a range, especially after a momentum move.  Notice in the playback video after the morning impulse, price oscillates within a range before breaking out further.
Know your place in the range

test

keep the ball rolling

I'm going to keep the ball rolling with RIMM and the 2xbar concept, especially since it had quite a big day today.
This will actually be a good lead-in to watching momentum bar midpoints intraday.
Straight out of the open RIMM displayed strong momentum, whether it was short covering, long entries, a combination of  both, who cares.
With a show of momentum you can figure that people are looking to buy a dip of some sort (but the smart ones will only pay wholesale for it).  Looking at the first 15-minute and 30-minute bar of the day, the midpoints of these two bars was right around $56.
Price retraced after the initial impulse to $56.13 before turning higher.  So, what was $56.13? 

An important note here:  If I'm looking for a pullback to $56 and price doesn't make it that far, then I should be looking for clues of a potential turn-around, such as we saw once price bounced at $56.13, retraced, formed a higher low, moved higher and then broke out.  Oftentimes it looks like this:

Here are the 5- and 15-min charts:

Referring to the above charts, the $56.13 area was a "confluence" of things:
- It was Resistance for the previous day, as shown on the 5-min chart.
- It was also the midpoint of the second 5-min bar of the day (to the penny! which kinda blows my mind), not shown but easily visualized.
- It was the High-Low Fib. retracement from 11/4 to 11/9, shown on the 15-min chart.
- It happened to coincide with a 38.2% retracement as measured off of the PDC and the opening swing high (not shown).
  The point being, it was a "dip" perceived as being fair value at that time.  But I think the most important point is to be aware of potential support and look for a pattern that supports your premise, similar to the one illustrated above.