Institutional Distribution

Back on April 2nd, we issued cautionary blog note: “It’s looking more like a classic “Pump n Dump” scenario, rather than a new fresh up-leg. We think it’s time to become more defensive in our trading and not get carried away with this recent move higher…Caution is warranted.”

We reiterated our cautionary tone again on April 8th stating: “Second straight day of weakness on expanding volume…This type of action suggests a more important corrective phase developing, perhaps similar to January 5+% pullback. Evidence is building that money managers are indeed becoming more “risk-adverse” and adjusting their portfolios to reflect changed assumptions related to Fed’s ZIRP…Only time will tell…Trend direction is firmly in place, so selling the rallies is now the “battle-cry” for traders…”

Thursday’s trading session marked the third “institutional distribution day” in the past five sessions with excess of 2.3M e-mini contracts exchanged, with price closing within the lower quartile of each down day’s range. This is clear evidence of selling conviction by the “BIGs”.

Overnight trade has price pushing lower to 1815 handle and within an extreme STAT X-Zone (1813 – 1816) where it’s anticipated to elicit a buy response. Failure to hold this zone continues the free-fall down to 1807 – 10 zone. IF price can find a bid and auction back above 1824, THEN the ONH (1832) becomes first target. Successful penetration and conversion of 1832 handle could force a short-squeeze into the weekend.

Volitility Index (VIX) has risen to 15.89, which makes intra-day trade more appealing for day traders, as swings become much wider and potentially more profitable.

Trade Strategy remains staying sharply focused and disciplined to our Premium and Discount trade setups that consistently offer PTG Traders outstanding profitunities.


Good Trading…David

Habitude Seven
I take the long term view. I am willing to lose in the short term. I understand that losses are a necessary cost of doing business, like inventory to a merchant. Drawdowns are viewed as temporary. I realize that my wins and winning periods are part of the broad process. Each trade is but one in a string of trades. What is happening now is one piece of a much larger puzzle. Because of this I do not get overly euphoric or despondent.

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