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dljones@cisco-futures.com



Meta-Profile/Visual Graphics Day Trading: DJ Index May 18, 2005
Donald L. Jones, May 27, 2005©


Foreword

In an earlier report on trading model development it was noted that every model or system has two distinct parts, a trader independent Market Strategy based upon market factors only, plus a personal Trading Strategy which reflects the needs and wishes of the individual trader.
Developing a Trading Model
In this article, we identify and track opportunity as offered by the market (market strategy). A trader can combine the 'market' part of the equation with the 'personal' part, known only to the trader, ending with a valid trading system, unique to that trader.

This article illustrates the development of a value based Market Strategy for the Dow Index to be traded on May 18, 2005. The strategy keys on value and it's change. For balancing or quasi-balancing markets the Meta-Profile value area defines the short-term support and resistance. The longer term of several up to 20 days finds support and resistance with the Overlay Demand Curve. In this example the market has already begun to trend up (shown by the Meta- Profile) and has no short term support/resistance for either the Meta-Profile or the 5 Day Overlay. Market movement has not yet taken out the 10 Day Overlay resistance and that becomes the target for entry. Market Strategy offers certain principles for exit. Just how those principles are interpreted and acted upon constitutes the personal Trading Strategy of the trader. This example disproves the old saw "never chase a market" by showing that, yes, the value trader has enough information to evaluate and sometimes enter an already moving market.

Part 1. The Foundation of Meta-Profile Trading

Day trading with the Meta-Profile is based on these facts:

1) Meta-Profile for the latest completed day provides the near term support and resistance prices (Value Area).
Market/Meta Profiles Background

2) The current trading day Meta-Profile displays the market's runs and pauses. A pause is an alert that a run may be over and so, if a trade is on, and the pause grows into congestion, it is time to exit. If the pause is just a regular pause and does not continue into congestion, it can be an additional trading opportunity. A number of pauses, followed by a final congestion is shown in the Market Strategy application example.

3) Overlay Demand Curve (on the Visual Graphic from the end of the previous day) shows the behavior of the market on a 1 to 20 day scale. The structure of the Visual Graphic is such that balances are easily identified. Balance limits are the longer timeframe (multi-day) support and resistance prices. A market may have been in balance 3 days or 13 days, or both.
Overlay Demand Curve Explained

4) A breakout from a balance, from the one-day profile or longer term, is an early alert for the start of a directional (trending) market. A breakout signals a potential change in value.

5) Locating the short and longer term support and resistance pairs orients a trader for a series of confirming breakouts when a market starts to run. The trader thus has a roadmap of the direction of the market movement and mileposts to mark its progress.

6) A CISCO user has access to the auction market data required for value trading. All the data are generated by CISCO. The trader does not need a PC program or data base, just an understanding of market dynamics. Step-by-step directions for getting Profiles and Overlays from the CISCO System are in the appendix at the bottom.

Developing a Market Strategy for trading
We start with the market at the end of the latest completed day to find the longer market condition (Visual Graphic) and shorter term (Meta-profile) which will be balancing or directional. Value will give us support and resistance for the latest day: Short term value (just latest day) is from the Meta-Profile. Longer term support and resistance comes from the Overlay Demand Curves posted on the Visual Graphic display (20, 10 and 5 days). This prepares us for trading the next day. Having support and resistance gives us two choices: we can trade breakouts (value change) or we can trade within the balance (responsive trading). This article focuses on breakout trade analysis. Our research has shown breakout trading to be about twice as profitable (per trade) as responsive trading.

The basic strategy, then, is to go with a breakout since that marks the point where value begins to change. Actually, there may be a series of breakouts within a day, one as price exceeds the Meta-Profile support or resistance (1 day value area), a second pair farther away that is the value region from, say a 3 day Overlay, and sometimes a yet farther one for say a 12 day overlay. In addition, all trending markets display a 'run, pause' behavior pattern. The final pause, of course, becomes a congestion, the start of a new balance. A true pause becomes an opportunity to add to ones investment. So, within a run of, say four hours, there may be several pauses. Understanding how the market behaves allows you to determine what the market is offering. Opportunity occurs at the short term breakout, longer term breakouts and pauses. Exits come at congestions and/or end of day.

Our focus here is on what the market is revealing, the market dynamics. At each point of market change we want to find the (price) decision points. This gives us the information for a 'Market Strategy'. Remember, 'Market Strategy' and 'Trader Strategy' together are required to form a trading model.
Trading Model Development

If your market strategy is invalid, all is lost. Trading coaches offer to teach you 'how to pull the trigger'. This coaching is really about one aspect of your personal 'Trader Startegy'. Unfortunately, many trigger pull problems are a result of bad trading experiences. If you do not have a valid market strategy, all the coaching in the world will not help. Furthermore, each trader is unique. We know that if the same information is given to ten traders at the same time, there will probably be several (ten?) decisions on the action to be taken and its timing. But, if each of the ten gets valid information, each will have the opportunity to make a profitable decision. Trading on invalid information or conclusions will inevitably lead to poor results. The correct market strategy must be in place before there is any hope for a 'model' or system.

For the trading example below, or all trading in fact, you have just two jobs. First use your end-of-day analysis of market condition to find your entry point (s). Once in a trade, immediately become a congestion watcher. Your trading decision tool is the Meta-Profile, which dynamically tracks the run, pause, run, pause behavior of your market. When you determine that a pause has morphed into a congestion, exit. Learn to do this well and you can forget about trailing stops. (And you will not need coaching on pulling the trigger.)

Review: Just why is Market Condition so important?

Short answer: It gives us market direction, entries and it offers a good first estimate of trading risk (one-eighth the value-area or value-region). Condition, in fact, is the basic element in a market strategy.

1) If the market is directional, the odds are with trades that go in the same direction. e.g. in an up trending market, trade longs only, looking for pull-backs (pauses) to re-enter. You improve your odds by trading with the trend, as everyone knows. Also, the occasional very large profits come from trades in the trend direction.

2) In a balancing, non-directional market, location of the support and resistance prices are action points for responsive trades. If price is near an upper resistance one looks for a place to short. Near the lower support, look for a long. Here, as noted earlier, we only examine breakout trades.

3) If a market is merely fluctuating we are reduced to trading noise. 1) is initiating trading, 2) is responsive trading and 3) is very dangerous to your financial well-being.

4) A balancing market defines risk, which is based on the range between the (upper) resistance and (lower) support. If that range is too small, the market is offering little opportunity. If it is too large, risk may be too high.
Simple rules for trading with auction market data

Part 2. The Visual Graphic Display sets the Market Strategy for DJ (M) May 18, 2005
How do we find Market Condition and trading action points? Basically, we use the Meta-Profile and it's big brother, the Overlay Demand Curve, along with some other market reference points at times. Value is the key. Changing value implies trend, stable value denotes balance. A convenient source of value data is the Visual Graphic (VG), shown below. VG gives an extensive survey of the last 20 market days. Change is incremental, a tick at a time encased in a good bit of back and forth action. On a longer timeframe (minutes or days) change appears more continuous. To understand today you must know yesterday and so on. You want to know where the current market condition came from and how it got there. Visual Graphic provides the picture.



Data from the Visual Graphic for the close of trading on May 17 prepares us for trading the 18th. There is a large amount of detail in the VG, but we will concentrate on the Profile data (lower right) and the 5 and 10 day Overlays.

Profile in the form of 1/2 hour bars is shown as the solid vertical bars on the far right of the display (30m bars). We see the first 13 half hours were stable and balancing while the last four are directionally up. The market changed value late in day. The Meta-Profile value (below the bars, VA U and VA L) is 102490 - 102160. But market value rose late in the day and the profile calculation covers a day that is really double valued. How trustworthy is the Profile as a representation of value in this situation? Not very, since the profile calculation assumes balance. But the last four bars unambiguously showed an upward direction.

What can the Overlays tell? The five day Overlay is just to the left of the dashed vertical lines inside the profile. It has a single distribution, but the close (103370) is above the distribution, so the 5 day indicates an uptrend started at about 103200 (breakout).

Turning to the ten day Overlay (middle one); it is in balance. Upside breakout price is 104000, if the market trades that high. The 20 day confirms the long term balance.

Step one: What do we know about market condition that we can use for guiding tomorrow's trading decisions?
1) Profile is not in balance, price is above balance (upward trend).
2) Five day Overlay has broken out on the upside (upward trend).
3) Ten day Overlay is still in balance, will break out at 104000 (if price gets that high). 
 
  Recap:  Market Condition from Visual Graphic:  DJ End of Day May 17, 2005:

                Meta-Profile      5 Day Overlay              10 Day Overlay

   Resistance         102490     Close above Resistance          104000

   Support            102160     None (no baslance)              101300

   Risk (estimated from 5 day)   1/8 X 19 = 2.5

   EOD May 17, Close: strong up.
   Market condition: upward trend
   Meta-Profile: Close above both upper Meta and 5 Day Overlay resistance
   Risk estimated from old 5 Day Overlay  $125
   Ten Day Overlay: Still in Balance: Upper Limit 104000
   Trading back below 103200 suggests trend is over (return to 5 Day Overlay)
   Trading above 104000 confirms upward trend (10 Day Overlay Breakout)
Step two: If it is available, examine the overnight market as an indication of sentiment prior to the open. 
 
   Premarket 
         Commodity:  ZDM - DJIA (CBOT)  A/C/E
         Trading Date:  20050518  Start Time:  00:00  Stop Time:  07:00
 
         CISCO Meta-Profile
------------------------------------------------
                         Tick      30 minute
    Price  TPOs          Count     Tick Bars
------------------------------------------------
   103360 *j               2     j   
   103350  j               2     j                    Premarket 
   103340  kr              2      k     r                103340
   103320  krst        |   5      k     rst F
   103310  krst        |   1      k     rst       
   103300  lrst        |   3       l    rst   
   103290  rst         |   1            rst   
   103280  mnqrst*     >   6        mn qrst  L           103280
   103270  nqr         |   2         n qr   
   103260  nqr         |   4         n qr   
   103250  nq          |   1         n q   
   103240  nq          |   1         n q   
   103230  nq          |   1         n q   
   103220  nq          |   1         n q   
   103210  nq              1         n q   
   103200  nq              3         n q   
   103190  p               1          p   
   103180  p               1          p   
   103170  p               1          p   
   103160  p               1          p   
   103150  p               2          p   

   Commentary: Premarket
     Market had a sinking spell shortly after midnight and now is back where 
     it started at the close after the strong up move yesterday. 
     Although the volume in the premarket is low, the trading later in the 
     morning (rst 3:30, 4:00 and 4:30) confirms upside strength.
Step three: It is now 7 AM, May 18. We will collect our market knowledge and use it to set our trading strategy for the day.

Market Strategy: Devised at 07:00, May 18, prior to DJ open at 07:20.

1) Overnight trading confirms the strength (5 day breakout) of May 17.
j is 0000 to 0030, t is 0430 to 0500. A sinking spell in p period 0230 to 0300 quickly recovered.

2) Market is directional up.
Trade longs only. Look for pullbacks for reentry if need be.

3) Price above 104000 is a breakout confirming up direction

4) Once in a directional market, the trader immediately starts looking for change, i.e. pauses and end-of-trend congestion.

Note: Two TPOs at a price indicates a pause.
Three TPOs at one price is a congestion warning.

Part 3. Application of Market Strategy to: Intra-Day Trading of DJ(M) May 18

Data from CISCO's CMaPS Meta-Profile. 
 

  First Hour 7:20 to 8 AM (Z, $)

         CISCO Meta-Profile
-------------------------------------------
                  V Tick      30 minute
    Price  TPOs   A Count     Tick Bars
-------------------------------------------
   103800  $      >   4      $   
   103790  $      |   2      $   
   103780  $      |   5      $   
   103770  $      |   4      $   
   103760  $*     |   2      $  L
   103750  $      |  10      $   
   103740  $      |   6      $   
   103730  $      |   5      $   
   103720  $      |   6      $   
   103700  $      |   3      $   
   103650  $      |   1      $   
   103600  $      |   1      $ F 
   103450  Z      |   1     Z   
   103440  Z      |   2     Z   
   103420  Z      |   1     Z   
   103410  Z          2     Z   
   103400  Z          4     Z   
   103350  Z          2     Z   
   103340  Z          1     Z   
   103320  Z          2     Z   
   103310  Z          1     Z   
   103300 *Z          2     Z   
 
   Commentary: Hour 1 (Periods Z and $)
     Market is showing upside strength. No breakout confirmation of 104000 as yet. 



     By Second Hour 7 to 9 AM (Z, $, A, B) 

            Start Time:  07:00  Stop Time:  09:00
 
         CISCO Meta-Profile
---------------------------------------------
                    V Tick      30 minute
    Price  TPOs     A Count     Tick Bars
---------------------------------------------
   103970  B            1        B   
   103950  B            7        B   
   103940  B            4        B   
   103930  B        |  10        B   
   103920  B        |   8        B   
   103910  B        |   4        B   
   103900  B        |  11        B   
   103890  B        |   7        B   
   103880  B        |  10        B   
   103870  B        |   3        B   
   103850  B        |   9        B   
   103840  B*       |   4        B  L  <== Breakout from pause
   103830  AB       |   9       AB    <== Pause
   103820  AB       |   4       AB   
   103810  AB       |   2       AB   
   103800  $AB      >  17      $AB   
   103790  $AB      |   6      $AB   
   103780  $AB      |  12      $AB   
   103770  $AB      |   8      $AB   <== Warning Region (3 TPOs)
   103760  $AB      |   4      $AB   
   103750  $AB      |  21      $AB F 
   103740  $AB      |   9      $AB   
   103730  $A       |   7      $A    <== Pause
   103720  $        |   6      $   
   103700  $            3      $   
   103650  $            1      $   
   103600  $            1      $   
   103450  Z            1     Z   
   103440  Z            2     Z   
   103420  Z            1     Z   
   103410  Z            2     Z   
   103400  Z            4     Z   
   103350  Z            2     Z   
   103340  Z            1     Z   
   103320  Z            2     Z   
   103310  Z            1     Z   
   103300 *Z            2     Z   
 
   Commentary: Hour 2
     Market continues showing upside strength. No breakout confirmation yet. 
     The pause in B period ($AB) is a trading opportunity: Low came at 8:31,
     High at 8:36,
 


     Second + Third Hour 8 to 10 AM  (A, B, C, D)

           Start Time:  07:00  Stop Time:  10:00
 
         CISCO Meta-Profile
---------------------------------------------
                    V Tick      30 minute
    Price  TPOs     A Count     Tick Bars
---------------------------------------------
   104300  D            2          D   
   104290  D            1          D   
   104280  D            3          D   
   104270  D            2          D   
   104260  D            1          D   
   104250  D            9          D   
   104240  D*           5          D  L
   104230  D            9          D   
   104220  D            5          D   
   104210  D            6          D   
   104200  D           15          D   
   104190  D            4          D   
   104180  D            9          D   
   104170  D            4          D   
   104150  CD           7         CD   
   104140  CD           1         CD   
   104130  CD       |   5         CD   <== Pause
   104120  CD       |   2         CD   
   104100  CD       |   4         CD F 
   104090  C        |   1         C   
   104080  C        |   4         C   
   104070  C        |   3         C   
   104060  C        |   1         C   
   104050  C        |   4         C   
   104040  C        |   2         C   
   104030  C        |   4         C   
   104020  C        |   3         C   
   104000  C        |   9         C   
   103990  C        |   2         C   
   103980  C        |   8         C   
   103970  BC       |   9        BC   
   103960  BC       |   4        BC   
   103950  BC       |  22        BC   <== Pause
   103940  BC       |   7        BC   
   103930  BC       |  14        BC   
   103920  BC       |  10        BC   
   103910  BC       |   4        BC   
   103900  BC       |  14        BC   
   103890  BC       |   8        BC   
   103880  BC       |  11        BC   
   103870  B        |   3        B   
   103850  B        |   9        B   
   103840  B        |   4        B   <== Breakout from Pause
   103830  AB       |   9       AB   
   103820  AB       |   4       AB   <== Pause
   103810  AB       |   2       AB   
   103800  $AB      >  17      $AB   
   103790  $AB      |   6      $AB   
   103780  $AB      |  12      $AB   <== Warning
   103770  $AB      |   8      $AB   
   103760  $AB      |   4      $AB   
   103750  $AB      |  21      $AB   
   103740  $AB      |   9      $AB   
   103730  $A       |   7      $A   
   103720  $        |   6      $   
 
   Commentary: Hour 3
     Market continues showing upside strength. Breakout confirmation in C 
     period at 104020. The short retracement 104150 - 104100 is another
     entry opportunity.
 



         Third + Fourth Hour 9 to 11 AM (C, D, E, F)
 
         Start Time:  07:00  Stop Time:  11:00
 
         CISCO Meta-Profile
---------------------------------------------
                    V Tick      30 minute
    Price  TPOs     A Count     Tick Bars
---------------------------------------------
   104400  F        |   1            F   
   104380  F        |   5            F   
   104370  F        |   5            F   
   104360  F        |   1            F   
   104350  F*       |   9            F  L
   104340  F        |   2            F   
   104330  F        |   2            F   
   104300  DF       |   4          D F   
   104290  DF       |   2          D F   <== Breakout from Warning
   104280  DEF      >   5          DEF   
   104270  DEF      |   5          DEF   
   104260  DEF      |   3          DEF F 
   104250  DEF      |  22          DEF   
   104240  DEF      |  11          DEF   <== Warning Region
   104230  DEF      |  18          DEF   
   104220  DEF      |  13          DEF   
   104210  DEF      |   7          DEF   
   104200  DEF      |  28          DEF   
   104190  DE       |   6          DE   
   104180  DE       |  15          DE   <== Pause
   104170  DE       |   9          DE   
   104160  DE       |   2          DE   
   104150  CDE      |  10         CDE   
   104140  CD       |   1         CD   
   104130  CD       |   5         CD   <== Pause
   104120  CD       |   2         CD   
   104100  CD       |   4         CD   
   104090  C        |   1         C   
   104080  C        |   4         C   
   104070  C        |   3         C   
   104060  C        |   1         C   
   104050  C        |   4         C   
   104040  C        |   2         C   
   104030  C        |   4         C   
   104020  C        |   3         C   
   104000  C        |   9         C   
   103990  C        |   2         C   
   103980  C        |   8         C   
   103970  BC       |   9        BC   
   103960  BC       |   4        BC   
   103950  BC       |  22        BC   
   103940  BC       |   7        BC   
   103930  BC       |  14        BC   <== Pause
   103920  BC       |  10        BC   
   103910  BC       |   4        BC   
   103900  BC       |  14        BC   
   103890  BC       |   8        BC   
   103880  BC       |  11        BC   
   103870  B        |   3        B   
 
   Commentary: Hour 4
     Market continues showing upside strength. The high in D period, 104300,
     is followed by a pullback in E period to 104150 (Low at 10:14, High at
     10:23). Then F period retraced (Low at 10:42), then moving higher (High
     at 10:54). Two trading opportunities this hour.

 

         Fourth + Fifth Hour 7 to 12 AM (E, F, G, H)

         Start Time:  07:00  Stop Time:  12:00
          
         CISCO Meta-Profile
---------------------------------------------
                    V Tick      30 minute
    Price  TPOs     A Count     Tick Bars
---------------------------------------------
   104850  H        |   1              H   
   104830  H        |   2              H   
   104810  H        |   2              H   
   104800  GH       |   7             GH   
   104790  GH       |   3             GH   
   104780  GH*      |   9             GH  L
   104770  GH       |   5             GH   
   104760  GH       |   3             GH   
   104750  GH       |  16             GH   <== Pause
   104740  GH       |   1             GH   
   104730  GH       |   9             GH   
   104720  GH       |   1             GH   
   104710  GH       |   3             GH   
   104700  GH       |  16             GH   
   104690  GH       |   2             GH   
   104680  GH       |  14             GH   
   104670  GH       |   7             GH   
   104660  GH       |   3             GH F 
   104650  GH       |   9             GH   
   104640  G        |   2             G   
   104630  G        |   3             G   
   104620  G        |   2             G   
   104600  G        |   2             G   
   104580  G        |   2             G   
   104570  G        |   2             G   
   104550  G        |   2             G   
   104530  G        |   3             G   
   104520  G        |   2             G   
   104510  G        |   1             G   
   104500  G        |   5             G   
   104480  G        |   1             G   
   104470  G        |   3             G   
   104460  G        |   1             G   
   104450  G        |   7             G   
   104430  G        |   1             G   
   104420  G        |   2             G   
   104400  FG       |   2            FG   <== Pause
   104380  FG       |   6            FG   
   104370  F        |   5            F   
   104360  F        |   1            F   
   104350  F        |   9            F   
   104340  F        |   2            F   
   104330  F        |   2            F   
   104300  DF       |   4          D F   
   104290  DF       |   2          D F   
   104280  DEF      >   5          DEF   
   104270  DEF      |   5          DEF   
   104260  DEF      |   3          DEF   
   104250  DEF      |  22          DEF   <== Warning
   104240  DEF      |  11          DEF   
   104230  DEF      |  18          DEF   
   104220  DEF      |  13          DEF   
   104210  DEF      |   7          DEF   
   104200  DEF      |  28          DEF   
   104190  DE       |   6          DE   
   104180  DE       |  15          DE   <== Pause
   104170  DE       |   9          DE   
   104160  DE       |   2          DE   
   104150  CDE      |  10         CDE   <== Warning
 
   Commentary: Hour 5 (G and H)
     Market continues showing upside strength. 
     The high in D period, 104300,
     is followed by a pullback in E period to 104150 (Low at 10:14, 
     High at 10:23.


 
         Hour 5 + 1/2  10:30 to 12:30 PM (F, G, H, I)

         Start Time:  07:00  Stop Time:  12:30
 
         CISCO Meta-Profile
---------------------------------------------
                    V Tick      30 minute
    Price  TPOs     A Count     Tick Bars
---------------------------------------------
   104850  HI       |   2              HI   
   104830  HI       |   3              HI   
   104820  HI       |   1              HI   <== Pause
   104810  HI       |   2              HI   
   104800  GHI      >  11             GHI   
   104790  GHI      |   5             GHI   
   104780  GHI      |  11             GHI   
   104770  GHI      |   7             GHI F 
   104760  GHI      |   4             GHI   
   104750  GHI      |  17             GHI   
   104740  GHI      |   1             GHI   
   104730  GHI      |   9             GHI   <== Warning Region
   104720  GHI      |   2             GHI   
   104710  GHI      |   4             GHI   
   104700  GHI*     |  18             GHI  L
   104690  GHI      |   2             GHI   
   104680  GHI      |  18             GHI   
   104670  GHI      |   7             GHI   
   104660  GHI      |   6             GHI   
   104650  GHI      |  15             GHI   
   104640  GI       |   3             G I   
   104630  GI       |   3             G I   
   104620  GI       |   4             G I   
   104610  GI       |   2             G I   
   104600  GI       |   6             G I   
   104580  G        |   2             G   
   104570  G        |   2             G   
   104550  G        |   2             G   
   104530  G        |   3             G   
   104520  G        |   2             G   
   104510  G        |   1             G   
   104500  G        |   5             G   
   104480  G        |   1             G   
   104470  G        |   3             G   
   104460  G        |   1             G   
   104450  G        |   7             G   
   104430  G        |   1             G   
   104420  G        |   2             G   
   104400  FG       |   2            FG   <== Pause
   104380  FG       |   6            FG   
   104370  F        |   5            F   
   104360  F        |   1            F   
   104350  F        |   9            F   
   104340  F        |   2            F   
   104330  F        |   2            F   
   104300  DF       |   4          D F   
   104290  DF       |   2          D F   
   104280  DEF      |   5          DEF   <== Warning
   104270  DEF      |   5          DEF   
   104260  DEF      |   3          DEF   
   104250  DEF      |  22          DEF   
   104240  DEF      |  11          DEF   
   104230  DEF      |  18          DEF   
   104220  DEF      |  13          DEF   
   104210  DEF      |   7          DEF   
   104200  DEF      |  28          DEF   
 
   Commentary: Hour 5.5 (I period 12 to 12:30)
     Market continues showing upside strength. However, I period high does
     not exceed H period, only the second time for this to happen today.
     Unlike the earlier pauses $AB and DEF, H period exceeded G period by
     only three ticks and I period pulled back after only reaching the H
     period high. I period High came at 12:05 and the Low much later at
     12:25. All in all I period looks like a cap, not just a pause in a
     strong directional market.
 


 
         Fifth + Sixth Hour   11 AM to 1:00 PM (G, H, I, J)

         Start Time:  07:00  Stop Time:  13:00
 
         CISCO Meta-Profile
----------------------------------------------
                     V Tick      30 minute
    Price  TPOs      A Count     Tick Bars
----------------------------------------------
   104850  HI        |   2              HI   
   104830  HI        |   3              HI   <== Pause
   104820  HI        |   1              HI   
   104810  HI        |   2              HI   
   104800  GHIJ      >  13             GHIJ   <== Congestion? 4 TPOs
   104790  GHIJ      |   5             GHIJ           |
   104780  GHIJ      |  15             GHIJ           |   
   104770  GHIJ      |   7             GHIJ           |   
   104760  GHIJ      |   5             GHIJ           |   
   104750  GHIJ      |  19             GHIJ           |   
   104740  GHIJ      |   2             GHIJ           |   
   104730  GHIJ      |   9             GHIJ           |   
   104720  GHIJ      |   4             GHIJ           |   
   104710  GHIJ      |   7             GHIJ           |   
   104700  GHIJ      |  22             GHIJ           |   
   104690  GHIJ      |   3             GHIJ F         |
   104680  GHIJ      |  19             GHIJ           |   
   104670  GHIJ      |  12             GHIJ           |   
   104660  GHIJ      |   7             GHIJ           |   
   104650  GHIJ      |  18             GHIJ   <== Congestion? 4 TPOs   
   104640  GIJ       |   3             G IJ   
   104630  GIJ       |   4             G IJ   <== Pause
   104620  GIJ*      |   6             G IJ  L
   104610  GIJ       |   3             G IJ   
   104600  GIJ       |   7             G IJ   
   104580  G         |   2             G   
   104570  G         |   2             G   
   104550  G         |   2             G   
   104530  G         |   3             G   
   104520  G         |   2             G   
   104510  G         |   1             G   
   104500  G         |   5             G   
   104480  G         |   1             G   
   104470  G         |   3             G   
   104460  G         |   1             G   
   104450  G         |   7             G   
   104430  G         |   1             G   
   104420  G         |   2             G   
 
   Commentary: Hour 6 (I, J)
   Consolidation (GHIJ) is apparent now. Market is directionless and
   a day trader has little guidance from value. One might be tempted to 
   sneak in a short, but in view of the strength of this market today, that
   could be counterproductive. The prudent trader stands aside.



 
         Fifth + Sixth + Seventh Hour   11 AM to 2 PM (G, H, I, J, K, L)

         Start Time:  07:00  Stop Time:  14:00
 
         CISCO Meta-Profile
------------------------------------------------
                       V Tick      30 minute
    Price  TPOs        A Count     Tick Bars
------------------------------------------------
   104920  L               1                  L   
   104900  L               3                  L   
   104890  L               1                  L   
   104880  L               4                  L   
   104870  L               2                  L   
   104860  L           |   1                  L   
   104850  HIL*        |   5              HI  L  L
   104840  HIL         |   1              HI  L   
   104830  HIL         |   3              HI  L   <== Pause (HI)
   104820  HIL         |   1              HI  L   
   104810  HIL         |   2              HI  L   
   104800  GHIJKL      >  16             GHIJKL   
   104790  GHIJKL      |   7             GHIJKL   
   104780  GHIJKL      |  17             GHIJKL   
   104770  GHIJKL      |  11             GHIJKL   
   104760  GHIJKL      |   9             GHIJKL   <== Congestion
   104750  GHIJKL      |  29             GHIJKL   
   104740  GHIJKL      |   3             GHIJKL   
   104730  GHIJKL      |  16             GHIJKL   
   104720  GHIJKL      |   5             GHIJKL   
   104710  GHIJKL      |   7             GHIJKL   
   104700  GHIJKL      |  32             GHIJKL F 
   104690  GHIJKL      |   3             GHIJKL   
   104680  GHIJKL      |  21             GHIJKL   
   104670  GHIJKL      |  16             GHIJKL   
   104660  GHIJKL      |   7             GHIJKL   
   104650  GHIJKL      |  22             GHIJKL   
   104640  GIJK        |   5             G IJK   
   104630  GIJK        |   5             G IJK   
   104620  GIJK        |   6             G IJK   <== Warning
   104610  GIJK        |   3             G IJK   
   104600  GIJK        |   8             G IJK   
   104580  GK          |   3             G   K   
   104570  GK          |   2             G   K   
   104550  GK          |   4             G   K   
   104540  GK          |   2             G   K   
   104530  GK          |   5             G   K   
   104520  GK          |   5             G   K   
   104510  GK          |   3             G   K   
   104500  GK          |   7             G   K   
 
   Commentary: Hour 7 (K, L)
   Consolidation continues.


  
         Fifth thru Eighth Hour   11 AM to 3 PM (G, H, I, J, K, L, M, N)

         Start Time:  07:00  Stop Time:  15:00
 
         CISCO Meta-Profile
--------------------------------------------------
                         V Tick      30 minute
    Price  TPOs          A Count     Tick Bars
--------------------------------------------------
   104920  L                 1                  L   
   104900  LM            |   4                  LM   
   104890  LM            |   1                  LM   
   104880  LM            |   5                  LM   
   104870  LM            |   4                  LM   
   104860  LM            |   1                  LM   <== Pause
   104850  HILM          |  11              HI  LM   
   104840  HILM          |   3              HI  LM   
   104830  HILM          |   5              HI  LM   
   104820  HILM          |   1              HI  LM   
   104810  HILM          |   3              HI  LM   
   104800  GHIJKLMN      >  25             GHIJKLMN   
   104790  GHIJKLMN      |  11             GHIJKLMN   
   104780  GHIJKLMN      |  21             GHIJKLMN   
   104770  GHIJKLMN      |  13             GHIJKLMN   
   104760  GHIJKLMN      |  10             GHIJKLMN   <== Congestion
   104750  GHIJKLMN      |  33             GHIJKLMN   
   104740  GHIJKLMN      |   5             GHIJKLMN   
   104730  GHIJKLMN      |  18             GHIJKLMN   
   104720  GHIJKLMN      |  10             GHIJKLMN F 
   104710  GHIJKLMN      |   8             GHIJKLMN   
   104700  GHIJKLMN      |  42             GHIJKLMN   
   104690  GHIJKLN*      |   6             GHIJKL N  L
   104680  GHIJKLN       |  25             GHIJKL N   
   104670  GHIJKLN       |  22             GHIJKL N   
   104660  GHIJKLN       |   8             GHIJKL N   
   104650  GHIJKLN       |  24             GHIJKL N   
   104640  GIJK          |   5             G IJK   
   104630  GIJK          |   5             G IJK   <== Warning
   104620  GIJK          |   6             G IJK   
   104610  GIJK          |   3             G IJK   
   104600  GIJK          |   8             G IJK   
   104580  GK            |   3             G   K   
   104570  GK            |   2             G   K   
   104550  GK            |   4             G   K   
   104540  GK            |   2             G   K   
   104530  GK            |   5             G   K   
   104520  GK            |   5             G   K   
   104510  GK            |   3             G   K   
   104500  GK            |   7             G   K   
 
   Commentary: Hour 8 (M, N)
   Consolidation continues. Market is clearly rotational.

 

         Entire Day   7 AM to 3:15 PM (Z. $, A, B, C, D, E, F, G, H, I, J, K, L, M, N, O)

         Start Time:  07:00  Stop Time:  16:00
 
         CISCO Meta-Profile
---------------------------------------------------
                          V Tick      30 minute
    Price  TPOs           A Count     Tick Bars
---------------------------------------------------
   104920  L                  1                  L   
   104900  LM             |   4                  LM   
   104890  LM             |   1                  LM   
   104880  LM             |   5                  LM   <== Pause
   104870  LM             |   4                  LM   
   104860  LM             |   1                  LM   
   104850  HILM           |  11              HI  LM   
   104840  HILM           |   3              HI  LM   <== Pause (HI)
   104830  HILM           |   5              HI  LM   
   104820  HILM           |   1              HI  LM   
   104810  HILM           |   3              HI  LM   
   104800  GHIJKLMNO      >  26             GHIJKLMNO   
   104790  GHIJKLMNO      |  11             GHIJKLMNO   
   104780  GHIJKLMNO      |  22             GHIJKLMNO   
   104770  GHIJKLMNO      |  14             GHIJKLMNO   <== Congestion
   104760  GHIJKLMNO      |  11             GHIJKLMNO   
   104750  GHIJKLMNO      |  40             GHIJKLMNO   
   104740  GHIJKLMNO      |   8             GHIJKLMNO   
   104730  GHIJKLMNO      |  27             GHIJKLMNO   
   104720  GHIJKLMNO      |  15             GHIJKLMNO   
   104710  GHIJKLMNO*     |  11             GHIJKLMNO  L
   104700  GHIJKLMNO      |  47             GHIJKLMNO F 
   104690  GHIJKLN        |   6             GHIJKL N   
   104680  GHIJKLN        |  25             GHIJKL N   
   104670  GHIJKLN        |  22             GHIJKL N   
   104660  GHIJKLN        |   8             GHIJKL N   
   104650  GHIJKLN        |  24             GHIJKL N   
   104640  GIJK           |   5             G IJK   
   104630  GIJK           |   5             G IJK   
   104620  GIJK           |   6             G IJK   <== Warning
   104610  GIJK           |   3             G IJK   
   104600  GIJK           |   8             G IJK   
   104580  GK             |   3             G   K   
   104570  GK             |   2             G   K   
   104550  GK             |   4             G   K   
   104540  GK             |   2             G   K   
   104530  GK             |   5             G   K   
   104520  GK             |   5             G   K   
   104510  GK             |   3             G   K   
   104500  GK             |   7             G   K   
   104480  G              |   1             G   
   104470  G              |   3             G   
   104460  G              |   1             G   
   104450  G              |   7             G   
   104430  G              |   1             G   
   104420  G              |   2             G   
   104400  FG             |   2            FG   <== Pause
   104380  FG             |   6            FG   
   104370  F              |   5            F   
   104360  F              |   1            F   
   104350  F              |   9            F   
   104340  F              |   2            F   
   104330  F              |   2            F   
   104300  DF             |   4          D F   
   104290  DF             |   2          D F   
   104280  DEF            |   5          DEF   
   104270  DEF            |   5          DEF   
   104260  DEF            |   3          DEF   
   104250  DEF            |  22          DEF   
   104240  DEF            |  11          DEF   <== Warning
   104230  DEF            |  18          DEF   
   104220  DEF            |  13          DEF   
   104210  DEF                7          DEF   
   104200  DEF               28          DEF   
   104190  DE                 6          DE   
   104180  DE                15          DE   <== Pause
   104170  DE                 9          DE   
   104160  DE                 2          DE   
   104150  CDE               10         CDE   
   104140  CD                 1         CD   
   104130  CD                 5         CD   <== Pause
   104120  CD                 2         CD   
   104100  CD                 4         CD   
   104090  C                  1         C   
   104080  C                  4         C   
   104070  C                  3         C   
   104060  C                  1         C   
   104050  C                  4         C   
   104040  C                  2         C   
   104030  C                  4         C   
   104020  C                  3         C   
   104000  C                  9         C   
   103990  C                  2         C   
   103980  C                  8         C   
   103970  BC                 9        BC   
   103960  BC                 4        BC   
   103950  BC                22        BC   
   103940  BC                 7        BC   
   103930  BC                14        BC   <== Pause
   103920  BC                10        BC   
   103910  BC                 4        BC   
   103900  BC                14        BC   
   103890  BC                 8        BC   
   103880  BC                11        BC   
   103870  B                  3        B   
   103850  B                  9        B   
   103840  B                  4        B   
   103830  AB                 9       AB   
   103820  AB                 4       AB   <== Pause
   103810  AB                 2       AB   
   103800  $AB               17      $AB   
   103790  $AB                6      $AB   
   103780  $AB               12      $AB   
   103770  $AB                8      $AB   <== Warning
   103760  $AB                4      $AB   
   103750  $AB               21      $AB   
   103740  $AB                9      $AB   
   103730  $A                 7      $A   <== Pause
   103720  $                  6      $   
   103700  $                  3      $   
   103650  $                  1      $   
   103600  $                  1      $   
   103450  Z                  1     Z   
   103440  Z                  2     Z   
   103420  Z                  1     Z   
   103410  Z                  2     Z   
   103400  Z                  4     Z   
   103350  Z                  2     Z   
   103340  Z                  1     Z   
   103320  Z                  2     Z   
   103310  Z                  1     Z   
   103300 *Z                  2     Z   
 
   Commentary: Hour 9 (O)
   The final period (O) confirms the consolidation. It is time to prepare
   for tomorrow. Profile value area for today is 104900 to 104220. Since
   the market spent so much time late in the day consolidating, this is
   a reliable number.

-----------------------------------------------------------------------
Additional Evidence for Pause/Congestion

A pause in a run is the norm. Markets run, catch their breath, and run again until the final pause begins the new balance or congestion.

Telling a pause from a congestion in real time is possibly the hardest task in trading. Trends often start with a bang. Congestions end with a whimper. Congestion development can take many paths. We noted in the strategy section that three TPOs together raise the suspicion of a trend end. From the analyses above it is clear that the $AB triad around 103780 is a pause. Likewise, the DEF set around 104250 is also a pause. But the GHI trio around 104750 was the beginning of a congestion. We would suspect it, but could not be sure until the next period (J).

Half-hour bars (Z, $, A, B, C,...) have proven to be a good first step in isolating pauses. We now move to 15 minute bars to obtain better discrimination, to break the market down into finer pieces. We focus on the identified pauses/congestion. 

 
  Pause 1, $AB (note: there are 2 15 minute characters for each 30 minute one)
           $AB (30 min bars) ===> 68ABCD (15 min bars)

            Commodity:  DJM - DJIA (CBOT)  DAY
         Trading Date:  20050518
           Start Time:  07:30
            Stop Time:  09:00
         Profile Type:  30 minute
 
 
         CISCO Meta-Profile
-------------------++++++++++++++++++++++++++++++
                            15 Minute Bars
    Price  TPOs             Micro Profile 
                   <------- 5hrs (or less) -------->
-------------------++++++++++++++++++++++++++++++
       103970 B                                 C 
       103950 B                                 C 
       103940 B                                 C 
       103930 B                                 CD
       103920 B                                 CD
       103910 B                                 CD
       103900 B                                 CD
       103890 B                                 CD
       103880 B                                 CD
       103870 B                                 CD
       103850 B                                 CD
       103840 B                                 CD
       103830 AB                              A CD
       103820 AB                              A CD
       103810 AB                              A CD
       103800 $AB                           68A CD
       103790 $AB                           68ABCD
       103780 $AB                           68ABCD
       103770 $AB                           68ABCD
       103760 $AB                           68ABC 
       103750 $AB                           68ABC 
       103740 $AB                           68 BC 
       103730 $A                            68 B  
       103720 $                             68    
       103700 $                             68    
       103650 $                             6     
       103600 $                             6     

   Commentary: $AB (30 minute bars) Pause
     The 15 minute display emphasizes the brevity of the pause.

 
 
  Pause 2, DEF (30 minute bars)
           DEF (30 min bars) ===> GHIJKL (15 min bars)

             Commodity:  DJM - DJIA (CBOT)  DAY
         Trading Date:  20050518
           Start Time:  09:30
            Stop Time:  11:00
         Profile Type:  30 minute
 
 
         CISCO Meta-Profile
-------------------++++++++++++++++++++++++++++++
                            15 Minute Bars
    Price  TPOs             Micro Profile 
                   <------- 5hrs (or less) -------->
-------------------++++++++++++++++++++++++++++++
       104400 F                                  L
       104380 F                                  L
       104370 F                                  L
       104360 F                                  L
       104350 F                                  L
       104340 F                                  L
       104330 F                                  L
       104300 DF                            G   KL
       104290 DF                            G   KL
       104280 DEF                           G  JKL
       104270 DEF                           G  JKL
       104260 DEF                           G  JKL
       104250 DEF                           G IJKL
       104240 DEF                           GHIJKL
       104230 DEF                           GHIJKL
       104220 DEF                           GHIJK 
       104210 DEF                           GHIJK 
       104200 DEF                           GHIJK 
       104190 DE                            GHIJ  
       104180 DE                            GHIJ  
       104170 DE                            GHIJ  
       104160 DE                            GHI   
       104150 DE                            GHI   
       104140 D                             GH    
       104130 D                             GH    
       104100 D                             G     

   Commentary: DEF Pause
     This longer pause clearly shows upside directionality. Most succeeding
     15 minute periods reached higher ground.


 
  Pause 3, GHI
           GHI (30 min bars) ===> MNOPQR (15 min bars)

            Commodity:  DJM - DJIA (CBOT)  DAY
         Trading Date:  20050518
           Start Time:  11:00
            Stop Time:  12:30
         Profile Type:  30 minute
 
 
         CISCO Meta-Profile
-------------------++++++++++++++++++++++++++++++
                            15 Minute Bars
    Price  TPOs             Micro Profile 
                   <------- 5hrs (or less) -------->
-------------------++++++++++++++++++++++++++++++
       104850 HI                               PQ 
       104830 HI                               PQ 
       104820 HI                               PQ 
       104810 HI                               PQ 
       104800 GHI                            NOPQ 
       104790 GHI                            NOPQ 
       104780 GHI                            NOPQ 
       104770 GHI                            NOPQ 
       104760 GHI                            NOPQ 
       104750 GHI                            NOPQ 
       104740 GHI                            NOPQ 
       104730 GHI                            NOPQ 
       104720 GHI                            NOPQ 
       104710 GHI                            NOPQ 
       104700 GHI                            NOPQR
       104690 GHI                            NOPQR
       104680 GHI                           MNOPQR
       104670 GHI                           MNOPQR
       104660 GHI                           MNOPQR
       104650 GHI                           MNO QR
       104640 GI                            MN  QR
       104630 GI                            M    R
       104620 GI                            M    R
       104610 GI                            M    R
       104600 GI                            M    R
       104580 G                             M     
       104570 G                             M     
       104550 G                             M     
       104530 G                             M     
       104520 G                             M     
       104510 G                             M     
       104500 G                             M     
       104480 G                             M     
       104470 G                             M     
       104460 G                             M     
       104450 G                             M     
       104430 G                             M     
       104420 G                             M     
       104400 G                             M     
       104380 G                             M     

   Commentary: GHI Pause
     The 15 minute display gives an entirely different picture from the
     30. The later time in the 30 minute I period (QR in 15 minute) is
     well below the I period high. The latter part of I period trades
     at the lowest price. A trader would be well warned.


 
  
  Pause 3 continued, GHIJ
           GHIJ (30 min bars) ===> MNOPQRST (15 min bars)

            Commodity:  DJM - DJIA (CBOT)  DAY
         Trading Date:  20050518
           Start Time:  11:00
            Stop Time:  13:00
         Profile Type:  30 minute
 
 
         CISCO Meta-Profile
--------------------++++++++++++++++++++++++++++++
                             15 Minute Bars
    Price  TPOs              Micro Profile 
                    <------- 5hrs (or less) -------->
--------------------++++++++++++++++++++++++++++++
       104850 HI                              PQ   
       104830 HI                              PQ   
       104820 HI                              PQ   
       104810 HI                              PQ   
       104800 GHIJ                          NOPQ S 
       104790 GHIJ                          NOPQ S 
       104780 GHIJ                          NOPQ S 
       104770 GHIJ                          NOPQ S 
       104760 GHIJ                          NOPQ S 
       104750 GHIJ                          NOPQ S 
       104740 GHIJ                          NOPQ S 
       104730 GHIJ                          NOPQ S 
       104720 GHIJ                          NOPQ S 
       104710 GHIJ                          NOPQ ST
       104700 GHIJ                          NOPQRST
       104690 GHIJ                          NOPQRST
       104680 GHIJ                         MNOPQRST
       104670 GHIJ                         MNOPQRST
       104660 GHIJ                         MNOPQRST
       104650 GHIJ                         MNO QR T
       104640 GIJ                          MN  QR T
       104630 GIJ                          M    R T
       104620 GIJ                          M    R T
       104610 GIJ                          M    R T
       104600 GIJ                          M    R T
       104580 G                            M       
       104570 G                            M       
       104550 G                            M       
       104530 G                            M       
       104520 G                            M       
       104510 G                            M       
       104500 G                            M       
       104480 G                            M       
       104470 G                            M       
       104460 G                            M       
       104450 G                            M       
       104430 G                            M       
       104420 G                            M       
       104400 G                            M       
       104380 G                            M       

   Commentary: GHIJ Congestion
     Continued filling in J period emphasizes the development of the congestion.



 
  Pause 3 continued, GHIJK
           GHIJK (30 min bars) ===> MNOPQRSTUV (15 min bars)

            Commodity:  DJM - DJIA (CBOT)  DAY
         Trading Date:  20050518
           Start Time:  11:00
            Stop Time:  13:30
         Profile Type:  30 minute
 
 
         CISCO Meta-Profile
---------------------++++++++++++++++++++++++++++++
                              15 Minute Bars
    Price  TPOs               Micro Profile 
                     <------- 5hrs (or less) -------->
---------------------++++++++++++++++++++++++++++++
       104850 HI                             PQ     
       104830 HI                             PQ     
       104820 HI                             PQ     
       104810 HI                             PQ     
       104800 GHIJK                        NOPQ S  V
       104790 GHIJK                        NOPQ S  V
       104780 GHIJK                        NOPQ S  V
       104770 GHIJK                        NOPQ S  V
       104760 GHIJK                        NOPQ S  V
       104750 GHIJK                        NOPQ S  V
       104740 GHIJK                        NOPQ S  V
       104730 GHIJK                        NOPQ S  V
       104720 GHIJK                        NOPQ S  V
       104710 GHIJK                        NOPQ ST V
       104700 GHIJK                        NOPQRSTUV
       104690 GHIJK                        NOPQRSTU 
       104680 GHIJK                       MNOPQRSTU 
       104670 GHIJK                       MNOPQRSTU 
       104660 GHIJK                       MNOPQRSTU 
       104650 GHIJK                       MNO QR TU 
       104640 GIJK                        MN  QR TU 
       104630 GIJK                        M    R TU 
       104620 GIJK                        M    R TU 
       104610 GIJK                        M    R TU 
       104600 GIJK                        M    R TU 
       104580 GK                          M       U 
       104570 GK                          M       U 
       104550 GK                          M       U 
       104540 GK                          M       U 
       104530 GK                          M       U 
       104520 GK                          M       U 
       104510 GK                          M       U 
       104500 GK                          M       U 
       104480 G                           M         
       104470 G                           M         
       104460 G                           M         
       104450 G                           M         
       104430 G                           M         
       104420 G                           M         
       104400 G                           M         
       104380 G                           M         

   Commentary: GHIJK Congestion
     Continued filling in K period reemphasizes the development of the 
     congestion area. It is too late to seek another move.








Appendix


End-of-day Profiles give you previous day value area 
(short term support and resistance).



Intra-day Profiles display the run, pause, run, pause market behavior.

To reach the Meta-Profile page from main CISCO page:
Under the waving flag
  Pointer on Data
    Pointer to Intra-Day Data
      Pointer to Intra-Day Main
      Click
        On Intra-Day page: Pointer to Intra-Day Profile
          Click on  Download Data
            Fill in Ticker Symbol Box  (e.g. DJ)
            Fill in Delivery Month     (e.g. U for Sept.)
            Set Start and Stop times   (must be of form 08:00)
            Profile Type Button on 30, you can change to 15
            You can uncheck OHLC Bars and/or Include Reference Points
              if you wish.
            Put in Username (e.g. 499mmm)
            Put in Password (e.g. pardon)
            Click Submit button


Overlays give you longer term value (multi-day support and resistance).

To reach the Overlay (Visual Graphics) page from main CISCO page:
Under the waving flag
  Pointer on Data
    Pointer to End-of-Day Data
      Click
        At blue box reading End-of-Day Visual Graphics ONLY
          Pointer to Download Data
            Click
              Select future (s) and delivery and check
                Scroll to bottom
                  Put in Username (e.g. 499mmm)
                  Put in Password (e.g. pardon)
                  Click Get Data button