Friday, August 31, 2012

Early read on the model - Initiating buying?

Strange as it might be to say after the last 10 trading days of bull trend in treasuries...

However, Market Profile doesn't care about the level in the market.  Market Profile is about the market based auction process, and supply / demand dynamics.  This mornings market dynamics would be best described as initiating buying.  Technically, the model needs another 12 market hours to establish today as an initiating buying day, so I'm not putting on a trade yet.  However, the pattern i'm looking for is sideways activity for a few hours, followed by an overnight dip buying opportunity.

Now for some non-model based commentary.  Today marks the last day of the month-end index extension.  So, this ends the cyclical bull trend in bonds.  Today's initiating buying will need to overcome a lack of month-end front-running...combined with the next setup dynamic (10yr and 30yr auction setup selling).  There is a 4-day week heading into the next payrolls.  Its quite possible that the market will rally into payrolls...while today's initiating buyers take profits as we head into payrolls.  That would allow the next bought of auction setup selling to take place from even higher prices.  I'm hesitant to say this, because this pattern would be "too good to be true."  However, all the signs point this way.

My next post will be using Dec contracts.  Good luck trading

govttrader out....

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