BarroMetrics Views: Successful Test?

The S&P attained my target zone last night.

Figure 1, the cash, Normalised Volume, shows that as the S&P moved into the zone, we have seen declining volume and range. Figure 2, the E-mini, traditional Market Profile, shows that last night, the E-mini gapped up and stayed within a narrow range. Normally, the two charts would raise the possibility of an Island Reversal opening for the today’s ‘day session’, and I would be looking for shorting opportunities in the London time zone.

Normally…..

But these are not normal times.

My shorting idea comes from range/volume analysis. It will ‘work’ if, and only if, the market assumption,  of a FED rescue being effective, itself is no longer held by the majority of players. Still, there is a sliver lining in this added uncertainty: we should know in the next couple of sessions whether the ‘assumption’ is operating.

  • If the S&P grinds up on low volume and range, we’ll know it is.
  • If declines and volume and range increase, then it’s probable that the assumption has been weakened to the extent that market forces are returning to ‘normal’.

sp-nvd-2013-06-28.png

FIGURE 1 S&P Daily Normalised Volume

Chart through the courtesy of Market Volume

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FIGURE 2 E-mini 30-minute Market Profile

Charts through the courtesy of Market Delta

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