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Markets in Profile 部分31
Markets in Profile 部分31
A GOLDEN OPPORTUNITY
We’ve made a pretty strong case that a healthy trending market trends,
then stops and balances, then trends again. But it doesn’t always hap-
pen this way, particularly when speculation takes over like it did in gold
chapter07 JWBK129-Dalton metrics January 4, 2007 15:19 Char Count= 0
0= 5820
H= 5825
L= 5705
C= 5817 Point 1 7250
∆= +114
6500
6250
6000
5817
5750
5500
5250
150000
98873
59960
50000
Vol = 102290 Dec 2006 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0
17 24 01 14 21 01 12 19 03 23 01 13 21 01 13 20 27 03 17 2- 11 May 06 2 01 12 19 26 03 10 17 24 01 14 21 01 11 18 25 02 09 16 23 01 13 20 01 11 18 25
NUM P003 15:34
FIGURE 7.14 Upward trend in Gold driven by speculation: Daily bar chart, De-
cember 2005 through June 2006.
Source: Copyright ľ 2006 CQG, Inc. All rights reserved worldwide. www.cqg.com.
during the first half of 2006. Due to extreme speculation, the market ne-
glected to stop and balance along the way; when such speculative trades
are unwound, a freefall can result. Let’s examine the relatively rare in-
stances in which trades can start out as short-term positions and then
evolve into much bigger opportunities.
At Point 1 in Figure 7.14, gold topped out in much the same way the
S&Ps did back in May 2006—gold made a new life-of-contract high on sub-
standard volume. The arrow at the bottom of Figure 7.14 points to volume
on the day that we’re discussing. As you can see, the volume was well be-
low the range that high-volume days can generate in this precious metal.
Notice that gold rose from about $580 an ounce to about $750 without
a prolonged balancing period. This is usually a sign of extreme specula-
tion, which can end badly for those who arrive late, or those who get in
early but continue to build on their positions, and for momentum players.
Balancing periods are healthy and important, in that they allow the market
participants to “catch their breath” and reevaluate value before proceeding
onward. Balancing periods enable you to judge the structure of the mar-
ket in order to determine how much more momentum is remaining in the
chapter07 JWBK129-Dalton metrics January 4, 2007 15:19 Char Count= 0
Good short-term trades often present themselves when a market has come
into balance. Such markets usually provide two opportunities: fading an
auction that reaches one of its bracket extremes and fails to continue; and
going with a breakout from the balance area. Figure 7.15 demonstrates
both of these possibilities.
Day 1 of Figure 7.15 is a trend day that has moved sharply higher. You
could reasonably expect that a move of this magnitude should show some
additional upward price appreciation. You can also assume that much of
the buying that drove the stock higher during the initial trend day occurred
late in the day, as that is where the market profile begins to take shape (the
circled area); the lower portion of the profile is thin, which indicates price
was moving rapidly without much time for volume to attach to it.
Day 2 established a very narrow value area that was totally contained
within the upper portion of the value area from Day 1. At this point, you
should be thinking about the mindset of the buyers from Days 1 and 2—are
they satisfied? Are they frustrated? Know your competitors, and stay one
step ahead of the game.
Day 3 opened slightly above the close on Day 2, trending higher all day
and closing with a late upward spike. When the day was complete, value
only managed to be overlapping-to-higher, and the shape, prior to the late
spike, exhibited the familiar p shape of short covering; it’s clear that MER
chapter07 JWBK129-Dalton metrics January 4, 2007 15:19 Char Count= 0
DAY 3
N
DAY 4 DAY 5
LMN
DAY 1 LM B B
DAY 2 L B B
D L BCDEM B High confidence
L BCD KL BCDEFGM B selling,
L BCD EKL BCDEFGH I JKM B single prints
L BCD EFK BCDEFGH I JKLM B
LN BD EFGH I JK BCDFGHJKLM B from opening bell
KLN BD EFGH I JK BCDJKLM B
KLMN BD EFGHJK BCKLM B
KLMN BDH DEGH BKLM B
JKLMN BDFGH I D BKLMN B
IJKLMN BDEFGH I CD KLMN BC
HIJKN BDEFH I J BCD KLN BC
HIJ BDEF JLM BCD KLN BC
HIJ BDEF JLM BCD KLN C
HJ BJKLM BC KL C
GH KLMN B KL C
GH MN B L C
G N B L C
FG N B L C
FG N L CD
FG L CD
FG CD Downside breakout
FG 3-Day balance CDE from three days
EF DE of balance
EF DE
CEF E
CE E
CE E
CDE E
CDE EI
CDE EI
CDE EHI
BCDE EHI
BCDE EFGHI
BCD EFGHI
B FGHI
B Trend day up FGHI
B large advance GHI
B GI
B GIJK
B GIJK
B JK
B Compare trend JKM
B day, which is KLM
LM
Trend day more elongated Trend day LM
LM
LMN
LMN
LMN
MN
N
N
N
FIGURE 7.15 Bracket extreme and subsequent breakout from balance occurring
in the S&P 500: Multiple daily profiles.
Source: Copyright ľ 2006 CQG, Inc. All rights reserved worldwide. www.cqg.com.
Days 1-4
combined into
single profile
N
LMN
LMB B
LB B
DLBCDEM B
LBCDKLBCDEFGM B
LBCDEKLBCDEFGHIJKM B
LBCDEFKBCDEFGHIJKLM B
LNBDEFGHIJKBCDFGHJKLM B
KLNBDEFGHIJKBCDJKLM B
KLMNBDEFGHJKBCKLM B
KLMNBDHDEGHBKLM B
JKLMNBDFGHIDBKLMN B
IJKLMNBDEFGHICDKLMN BC
HIJKNBDEFHIJBCDKLN BC
HIJBDEFJLMBCDKLN BC
HIJBDEFJLMBCDKLN C
HJBJKLMBCKL C
GHKLMNBKL C
GHMNBL C
GNBL C
FGNBL C
FGNL CD
FGL CD
FG CD
FG CDE
EF DE
EF DE
CEF E
CE E
CE E
CDE E
CDE EI
CDE EI
CDE EHI
BCDE EHI
BCDE EFGHI
BCD EFGHI
B FGHI
B FGHI
B GHI
B GI
B GIJK
B GIJK
B JK
B JKM
B KLM
LM
LM
Could you visualize LM BC
the combined LMN BC
profile LMN BC
from looking at LMN BC
individual days? MN BC
N BCD
N BCDE
N BCDE
BCDEG
FIGURE 7.16 Multiple-day profile for the Days 1–4 shown in Figure 7.15, fol-
lowed by the activity on Day 5: S&P 500 profiles.
Source: Copyright ľ 2006 CQG, Inc. All rights reserved worldwide. www.cqg.com.