Monday, November 26, 2012

Market Profile Premise - There Is A Battle And The Shorts Are In The Lead

Last Tuesday there was a ZN seller from 133-24+ --> 133-19+
Market then traded down to 133-09 and went sideways for 3 low volume days
Monday there was a decent volume ZN buyer from 133-19 --> 133-22+, after which the market returned to 133-17+.

The market has spent the majority of its time today (both before and after the buying) around 133-17+.  Though not very dramatic, I would call that a small "face" to the buyer.  While it is possible that the buyer was actually short covering and not a fresh buyer, I'm not inclined to think so.  With Monday's buyer positioned @ 133-21+ (avg price of buys), and the seller positioned @ 133-23 (avg price of sales), the distance between these 2 traders is small, and yet the seller still seems in control (market has not been able to stay above the buyers price).  While we can't know who will ultimately win out, we will know when it happens.  Either there will be a long liquidation event, or there will be a short covering event.  Both are predicated on pain and commitment, and both will be violent.

While I still believe there will be an attempt for a UST rally for month-end, that may not happen until Thursday / Friday.  In the meantime, we have what seems to be 2 large traders battling it out.

More later...govttrader out

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