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Posted by Brandt Hackney

Publisher of & member site Wolf on Wall Street, equities/options trader 13 yrs., 4 yrs teaching, won multiple awards for trading & indicators.

Day Trade Signals

by Brandt Hackney on June 1, 2015

in Commodities, Options, Stocks, Technical Analysis

This is a post from our members’ site,

While we are not specifically looking for day trade set-ups, our indicators and market giveaways today were so reliable, we called not one, but two tradable intraday areas; the first the low of the day and the second the high of the day in to the afternoon sell-off with plenty of time to prepare in advance. This is the exact post with links to earlier posts throughout the day (usually about a dozen during nomral market hours per day).

For more information about our members’ site, Wolf on Wall Street, see the following links which are also always perm-linked near the upper right side of the website, under “Directory”.

This afternoon’s post,

There It Is…
Posted by : Brandt
5:30 p.m.
 June 1, 2015
If any of you traded this afternoon’s decline on our warning, I’d be curious to hear how you did.
In any case, this afternoon’s (2:07 p.m.) Quick Market Update said the following:

It looks like an intraday decline is about to begin. I don’t see this as a huge move down and will not be entering any positions for it, but some of you shorter term day traders may be interested. I do believe I see a pattern developing here”

The 3:16 p.m. Market Update contained among other things, the pattern I suspect is developing. Today’s close didn’t violate that pattern. However, despite the earlier warning that intraday market downside was on the way and it was considered an intraday move, it was significantly stronger than I would have expected. More on that with the 3C charts of the averages below.

The NYSE intraday TICK chart’s readings (and our custom TICK indicator) were actually quite effective at giving early warning, not only at intraday capitulation (market lows in the morning), but intraday churning (market breadth deterioration in the afternoon)  giving us a very early hint of the weakness that was to follow from the Quick Market Update post.
 This is our custom NYSE TICK indicator- or different way to view TICK information.
Note the intraday flame-out or short term capitulation. This is no coincidence that just after 10 a.m. this morning the TICK hit an extreme deeper than -1250 as 3C was putting in positive divergences. AT # 1 TRADERS WERE BEING KICKED OUT OF POSITIONS ON THE A.M. DECLINE UNTIL A LARGE CLUSTER OF STOPS WERE HIT.  Wall St. can pick up those shares en-masse with no one noticing or asking, “Who is on the other side of the trade?” and on the cheap, whereas the normal mechanics of supply and demand would normally send prices higher when a large position is bought (even if only for a day trade or other nefarious reasons such as to complete a flag-like structure to fool more traders).

Did you draw in my trendiness and then look at the daily SPY close? Interestingly we have a hammer and guess where? I’ll show you just below…

At #2 we had an intraday “Churning” event; even though this is well before the downside reversal in price intraday, at this point it was just a matter of time as internals were going in the opposite direction of price. As I said in the afternoon ( 3:15 p.m.) Market Update:

“…this flag is being specifically and purposefully created…”

 Looking at the normal NYSE intraday TICK data, I drew simple trendily channels around the TICK data. Note the morning “Flameout” at 10:14 a.m. (in white) where the TICK saw a reading well over -1250 (the number of stocks being bought per bar less the number being sold on the same bar). We always look for the candlestick on volume and/or the TICK clues for intraday flameouts or churning.

Incidentally a churning event occurred just 2 hours later at 12:19 p.m. (yellow) at a TICK extreme of over +1250. Note the trend in intraday internals after the 12:19 event. The market’s internals never recovered from the afternoon churning event, but this wasn’t random; as I said, if you drew the redlines then just look at the daily SPY chart.

Today’s SPY closing candle is a bullish hammer within the pre-destined/articificial “flag-like” price structure. Note where the intraday highs are on the chart relative to the trendiness and the intraday lows relative to the channel’s trendiness. This is also a bullish upside reversal candle, however its authenticity must be questioned (for a number of reasons), but volume alone is enough to question the price pattern. Rising volume would have made the candlestick at least 3x more effective or authentic. Not to say it won’t work as intended, I just wouldn’t trust any move off it, but we knew that long before the close.

 As mentioned above, the intraday lows and flameout within a mini intraday capitulation event is met with 1 min 3C accumulation. In other words, once the shares were freed up by triggering a stop level where shares were congregated on pre-set stops (which is why I NEVER place limit orders). all they had to do was buy them, not only in large size, but at a discount rather than the normal laws of supply and demand which is a large part of what head fake moves are all about.

Note the SPY leading negative 3C divergence and this after the initial warning in the Quick Market Update post at 2:07 p.m. today.

 It doesn’t stop there, but migrates to stronger charts like SPY 2 min
and even SPY 5 min leading negative in an hour of two.
 The QQQ saw the same leading negative divergence (2 min)
Also note the accumulation this morning (white) at the flameout/stop run.
 Again, the divergence is stronger than expected with a leading 3 min chart within an hour.
 The IWM 1 min intraday saw its highs just as the TICK churning event occurred around 12:19 p.m. EDT, note the 3C negative divergence at intraday highs, but then additionally a leading negative divergence just after 2 p.m.
 IWM 2 min
IWM 3 min also leading negative…
And most impressively, the 5 min 3C / IWM chart with a leading negative divergence.
If my earlier theory was correct, I’d look for a quick head fake/stop run below the flag channel lows where new stops will have been placed.
While we are getting more data than Friday, it’s still a bit ambiguous, however what is not is the weakness in the market , able to be seen even on short term intraday charts.

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