SPY is up to a very important level today (and yesterday)
The lowest volume of trading in the SPY is right here across the price action from 212 down to 198.
Why is "low volume" important?
Because low volume means that there were so many sellers at 204 "on the way down" that the buyers were overwhelmed and couldn't handle the deluge of sell orders.
Where a market "DOESN'T TRADE" is more important than where it "DOES TRADE". Why? Because the low-volume areas are where one side of the market is weaker relative to the other. The place where HIGH volume trades is where the bulls and bears get together and agree on a price. High volume areas are useful for setting up trades and for referencing market action, but it is the LOW VOLUME zones that should keep your attention much more finely tuned.
You can risk a tiny amount up here as we test to see if those sellers are still here. The market will take a little while to get through this zone and we can learn a lot about the future of price action by watching what happens here at the 203.50-204.25 level.
At the end of today, a short sale could be setting up, but I won't know until the end of today: What I'm looking for is a trading range smaller than yesterday. If true, then short if "down on the day" tomorrow for risk averse. If you can handle overnight gap risk then short at the close and risk 1 average trading range or roughly 1.5 points. Target 3-4 points in 3-4 days.
Tim
10:53AM EST 3/17/2016 203.70 last SPY
Why is "low volume" important?
Because low volume means that there were so many sellers at 204 "on the way down" that the buyers were overwhelmed and couldn't handle the deluge of sell orders.
Where a market "DOESN'T TRADE" is more important than where it "DOES TRADE". Why? Because the low-volume areas are where one side of the market is weaker relative to the other. The place where HIGH volume trades is where the bulls and bears get together and agree on a price. High volume areas are useful for setting up trades and for referencing market action, but it is the LOW VOLUME zones that should keep your attention much more finely tuned.
You can risk a tiny amount up here as we test to see if those sellers are still here. The market will take a little while to get through this zone and we can learn a lot about the future of price action by watching what happens here at the 203.50-204.25 level.
At the end of today, a short sale could be setting up, but I won't know until the end of today: What I'm looking for is a trading range smaller than yesterday. If true, then short if "down on the day" tomorrow for risk averse. If you can handle overnight gap risk then short at the close and risk 1 average trading range or roughly 1.5 points. Target 3-4 points in 3-4 days.
Tim
10:53AM EST 3/17/2016 203.70 last SPY
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