Levels + Macro View

For the past two weeks, the market has camped out around the all time highs with 1) diminishing participation, 2) pathetic volume, 3) low activity, and 4) small intraday ranges.  These factors strongly suggest that the professionals are not actively a part of the auction, with the day-timeframe traders and algos dominating each session.  After all, it only makes sense - do smart, well-capitalized market participants buy the high? No.  But, the kicker is no one is selling it either, due to this idea that the market will only go up.  Pullbacks are of course bought - a strategy that has yielded reward for years now.  So when the market it as the highs, the trading becomes rather miserable.

Given the weakness of the hands holding positions up here, the chances for a hard liquidation break only increase with each passing day.  This would create good trading conditions once again!  Here are some levels and ideas going forward:

Daily Chart as of 2/27

Below the current prices, the market structure is very suspect: multiple poor lows, unvisited prominent POC's, and too many anomalies to point out.  All of these point to weak money pushing the market up, with weaker money entering at each successive updrive, until the weakest of them all are at the high.  When stronger hands enter, it won't take much to puke out the longs.

Going forward, Friday closed between a rock and a hard place: both beneath and above it are consecutive poor lows & highs.  Multiple poor lows/highs create an exponentially larger tug on price, so imagine the market as currently being between two poles of a powerful magnet.  Until one direction (up or down) is visited, we can't say for sure which direction it will go.  But with two weeks of weak hands loaded up, any downside break is likely to be powerful and lasting.

Bonus: What is a poor low/high?  Let's look at the profile.

Two poor highs are circled

Poor highs are when two half hr bars close very close (usually 1tick or less) to each other.  Usually the profile will be rather fat even out to the extremes, instead of slimming down.  To contrast the poor high, one need only look at the lows from each session that made a poor high - they are good: both have tails that are reasonably long, in proportion with the rest of the profile.  Poor highs have the tendency to not be a lasting foundation - the market revisits them in search of a better counter-push to establish a base from which a lasting directional push can occur.  Something to consider when you're evaluating the odds of your trade working!