Learn These Simple Price-And-Volume Rules

The September S&P
futures (SPU and ESU) opened
Monday’s session with a +2.00 point gap
to the upside, after a tight overnight range. Bullishness was in the air before
the open after IBM and the entire Chip Equipment sector were upgraded. Chip
stock upgrades are becoming a game of musical chairs as the analysts scramble to
not be the last one to recommend the sector before the music stops. The
contract retraced a bit before taking a sharp U-turn at the Daily Pivot at
1,023.75 and forcing a round of short-covering through the break of Friday’s
high at 1,029.50. After the first 30 minutes, the futures settled into a 4
point range, and that was pretty much it for the day. The session turned into
more of what we’ve seen most of the past 2 weeks as the down moves were met with
snaps back to the upside, and confirmed by the TICK bouncing off of 0.

The September S&P 500 futures closed Monday’s
session with a gain of +8.25 points, and finished at a new 15-month high. Volume
in the ES was estimated at 667,000, which was ahead of Friday’s pace, and above
average. On a daily basis, the futures failed to confirm Friday’s reversal, but
are still hovering at the 1st reversal area on a bearish Butterfly pattern. On
an intraday basis, the 60-min and 13-min bear flags were negated by the up move,
and the 13-min chart closed with a cup and long handle (see chart).


On Tuesday morning at 10 am ET, we have the
Wholesale Inventories report for July, with a consensus of a 0.1% increase.
Normally, this report isn’t a market-mover, but with the light economic calendar
most of the week, it probably won’t take much news to move the futures. So, be
flat ahead of the report just like any other.

Listen to What Volume Tells You!

There are 6 simple rules to learn in order to
interpret price and volume movements:

1. Increasing volume on decreasing price signals
an acceleration in selling pressure and price decrease.

2. Increasing volume on decreasing price signals
an acceleration in selling pressure and price decrease.

3. Decreasing volume on increasing price
indicates an easing in buying pressure and a leveling in price or price
reversal.

4. Decreasing volume on decreasing price
indicates an easing in selling pressure and a leveling in price or price
reversal.

5. Higher-than-normal volume at price highs
indicates selling into strength and a price ceiling.

6. Higher-than-normal volume at price lows
indicates buying on weakness and price support.

Please feel free to email me with any questions
you might have, and have a good trading day on Tuesday!


Chris
Curran

P.S. Spend 3 days with me
trading the E-minis live!

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