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I think that there is something common to screwy, generally "quiet",
non-trending markets that serves as a floor signal to the tune of "boys,
we're going the other way for a bit". The signal itself is a trade put
through at one tick below a floor or one tick above a celing.
Let me explain myself. I think the S&P is a screw for daytraders. A great
big up-against-the wall .... you get my drift. Manipulated by the floor
wherever possible. I think that in these markets the Bid/Ask that you see on
the Mini is totally bogus and almost purely controlled by faster and better
informed sources with deep pockets. The game is often to give the small
timeframe guys: 1. a trend, and 2. a retracement entry. I think the
countertrend swings or "screw swings" to flush out these weak hands have a
magnitude of 3 - 4 points and effectively flush out traders with small
daytrade-size stops (roughly the size of the excursion that the premium
takes on a 1-min chart)
I think one example of this behaviour that I have seen countless times was
on the E-mini at 2:20 pm EST - visible on a 1 min chart. Danger timezone of
lunch and just after lunch - quiet market (another potent one is after the
close of Bonds). A small sell-off begins that looks like many of the
sell-offs that daytraders would be accustomed to seeing recently. Offers a
retracement for entry. Wild gyrations of 3 - 4 points in the premium of the
big contract. Big volumes hoarding both the E-Mini Bid and Ask while trade
volumes are all 1's and 2's. Ticks coming into my machine at a snail's pace.
Other factors in the behaviour of the cash. The symptoms, in my humble
opinion, that it's pretty dead, and likely to swing you around for a while
rather than trend.
A base forms (on the E-mini) - what I believe is professional accumulation.
The signal itself is a trade of 1 tick below the low of that base (1342.75)
at 1342.50 at 2:20 pm EST, and, the market going the other way for half an
hour.
This observation relies on the assumption that we are in fact in a quiet
market - the key to being able to manipulate. I use observations such as
these as timing tools for entries and exits elsewhere, not in their own
right.
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