Saturday, March 30, 2013
Price oscillated at Fair Value throughout the premarket hours. Once the Failed New Low printed early in the morning and the Value Area Low (VAL) was breached, there was a final retest of VAL. From here price attempted to break above Value Area High (VAH), retraced to the Point of Control (POC) and opened the New York Market at VAH. Advance/Decline Breadth and Up/Down Volume ratios opened positively, with cumulative TICK printing bullish at the start of trading. A quick retracement to VAH coincided with support from the 110 Exponential Moving Average (EMA) on the Breadth and Up/Down Volume: this effectively took prices on a nice rally for the rest of the morning. The action on the Double Stochastic on the 21 minute aggregation of price showed the 'Rubber Band' action I continue to refer to. This occurs when the Long Term Stochastic (LTS) is printing white, indicating an extremely positive reading, and meanwhile the shorter term Stochastic pulls back to the zero line like a Slingshot. Once prices resume up from the retracement, the Short Term Stochastic joins the LTS in the extreme positive reading area, and prints green along with the LTS' white. This action combines with the fact that the Ergodic Oscillator's movement during this same reaction, never breached the zero line on the retracement down, thereby joining the Double Stochastic in extremely positive readings. This is the ideal endpoint the trader is looking for in a long trade prior to exiting the position. We should also note the Double Moving Averages provided excellent support for price mid-day and confirmation was provided with a PPS buy arrow (John Person's PPS, proprietary indicator). It would be remiss not to mention that the lows in the premarket were supported by the POC of the 20 day Market Profile and TPO Profile (Time-Price Opportunity).