Example of using LDB(tm) research program
This example uses the LDB reasearch program to determine the Bond
market condition on June 7th. Then we examine how June 8 turned out
This example consists of 5 Steps:
Step 1 Volume Analysis: Who is buying/selling
Step 2 Overlay Graphics: Market condition
Step 3 Summary of the market at end of June 7
Step 4 What happened on June 8?
Step 5 Commercial Capping: Support and Resistance
Step 1 Volume Analysis: Who is buying/selling
======================================
Bonds have been in an up-trend since May 31.
Latest day volume versus five day average:
-----------------------------------------
Total Commercial Public
Volume Volume Volume
------- -------- -------
May31-June6 5 day average 733,368 48,039 230,035
June7 only 646,130 47,678 191,615
------------------------- ------- -------- -------
%Difference -12% -1% -17%
1. Total volume is down 12 % and so the trend is losing momentum.
2. Public volume is down 17% also.
3. Commercials are down 1% and also flat
Latest day volume balance: (using entire price range of June 7):
----------------------------------------------------------------
Total Commercial Public
Volume Volume Volume
------- -------- -------
Upper half 50% 47% 53%
Lower half 49% 53% 46%
1. Total volume over the day's price range is balanced.
2. Commercials are bearish 53% to 47%
3. Public traders are bullish 53% to 46%
Conclusions:
------------
The up-trend is fading and possibly reversing
Commercial traders are selling on large volume
Meanwhile the public is trading less but still buying
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Step 2 Overlay Graphics: Market condition
==================================
June 1 - 6 June 3 - 7
105-24 6 6
105-20 666 666
105-16 66666666 66666666
105-12 666666666 Close 6/6 6666666667 Close 6/6
105-08 6666 666677
105-04 6 6777777
105-00 36 36777777777 Close 6/7
104-28 33 3377777
104-24 3333 Close 6/3 3333777 Close 6/3
104-20 33333 33333
104-16 3333 3333
104-12 333 333
104-08 333 333
104-04 33 33
104-00 33 33
103-28 33 33
103-24 22333 Close 6/2 333
103-20 222222233 33
103-16 22222222333 333
103-12 12222333 Close 6/1 333
103-08 123 33
103-04 113 3
103-00 113 3
Note: Numbers identify TPO's for the day e.g. 3 ==> June 3
A TPO exists if one or more trades occurred at that price in
a particular 30 minute period
The June 1 run started at 102-14 and ended in a pause at 103-12
June 2 saw trading continue to a pause, closing at 103-24
June 3 saw an early re-tracement, run and pause at 104-24
On June 6 the run continued, with a pause around 105-12
On June 7 a balance is seen in Overlay between 105-24 and 1104-24
Conclusions:
-------------
The balanced market signals the end of the uptrend.
Breakout prices : on the upside is 105-24 and the downside is 104-24.
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Step 3 Summary of the market at end of June 7:
=======================================
Volume Analysis shows:
1. Trading is decreasing
2. Commercials are selling
3. Public is still buying
Overlay graphics show:
1. Market is reaching a balance
2. Balance limits are 105-24 and 104-24
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Step 4 What happened on June 8?
========================
y z A B C D E F G H I J K L M
105-24 4
105-22 19 32 18
105-20 24 46 10 74 30 66
105-18 17 100 39 72 29 36
105-16 83 86 38 55 2 3 3 11 64 54 7
105-14 7 82 15 92 79 77 83 68 19 27 17
105-12 3 3 46 31 17 56 50 30 22 4
105-10 26 106 25 5 7 17
105-08 60 40 2 47
105-06 27 5 38
105-04 28
105-02 38
105-00 39
104-30 16
104-28 23
104-26 25
104-24 6
104-22 11
104-20 4 7
104-18 4 1
104-16 3
Numbers in columns are tick counts
The day was spent consolidating within the June 3-7 balance,testing
the high of 105-24 at the open. Day traders had a number of
opportunities for responsive shorting.
Late in the day, starting in the K period (1 to 1:30 PM) a downturn
was confirmed as the market dropped below the 104-24 level
established by the Overlay development of June 3-7. This is an
alert to the position trader to go short.
The ensuing downward trend ended on July 11 at par
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Step 5 Commercial Capping: Support and Resistance
==========================================
Commercial LDB data offers a sensitive way to measure value changes.
The techniques in the book "Value Based Power Trading" is an
integral part of the Trader Control Package.
Commercials buffer or 'cap' the market by selling if the price gets
too far above value and by buying when the price goes too low. Value
lies between the upper and lower caps.
For the period June 1-7 commercial capping looked like:
June 7 Upper Commercial Resistance at 105-13
Lower Commercial Resistance at 104-24
June 6 Upper Commercial Resistance at 105-24
June 3 Upper Commercial Resistance at 105-00
June 2 Lower Commercial Resistance at 103-10
June 1 Upper Commercial Resistance at 103-12
Lower Commercial Resistance at 101-23
As price rises, the commercials identify upward trending support
and, occasionally, resistance levels.
At trend end, the commercials are the first to see it. They respond
with resistance at 105-24 and 104-24. This is essentially the same
information independently found from the Volume and Overlays.
Commercial Confirmation of the Volume and Overlay analyses adds
substantially to one's market understanding and confidence.
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For more information phone 1-800-800-7227 or 1-303-306-1521
Send e-mail to CISCO <dljones@cisco-futures.com>
CISCO US postal address is: 14571 E. Mississippi Ave., #202, Aurora, CO 80012
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