Buyers Come In On the Down Opening
The market initially opened down this morning, likely due to weakness in the Far East markets, but buyers have stepped. Before we see today’s action, we will review Friday’s TradeFlow chart.
Trading Friday was interesting because the market gapped down at the opening, and the volume of trading was fairly heavy as indicated by the wide TradeFlow bars. Sellers were not able to maintain control, as indicated by the crisscrossing of the buy (green) and sell (red) volume lines of the TF5VCrs study. Checking the histogram bar A of the TF5Um5D study we see a low reading, and would expect the market to retest support because the next histogram bar was negative (indicating sellers are starting to dominate). But, the support zone held and there was a positive sign for the bulls when the TF5Um5D study histogram bar B was higher than bar A. But, as the market rallied to filled the gap, the volume was low, as indicated by the narrow TradeFlow bars. Also, the buy (green) and sell (red) volume lines of the TF5VCrs study were heading down, which usually indicates a countertrend move. The buy volume line should be climbing. To read more about this, please check out my article TradeFlow Custom Studies.
Following filling the gap, the market traded down, but as the buy and sell volumes line went down, the TF5Um5D study diverged with the price action. Sellers were not able to attract a following. Then, the market began to climb and the buy volume line did as well, which is a sign of an up trend.
This morning, the e-mini S&P opened and traded down into the support zone, held and the TF5Um5D study turned up at the double arrow marked A. The market then climbed back to a resistance level established late Friday. Buyers were moderately dominating, but they did not really come into the market until the double arrow marked with the B. We can see the buy (green) volume climbed above the sell (red) volume line of the TF5VCrs study, indicating buyers coming in.