A visual representation of the trading pit using tick data on index futures

A visual representation of the trading pit using tick data on index futures

In this video, we explain how to use the tick speedometer indicator to reveal the trading activity or participation.

00:11

Current market indices overview

00:57

Possible slowdown and market congestion

00:57

The speaker discusses a potential slowdown in the current bullish market trend, suggesting possible congestion, a pullback, or even a full reversal. The analysis focuses on intraday movements using five-minute charts of three key US indices: the YM (Dow Jones), the NQ (Nasdaq), and the ES (S&P 500). The visuals include these indices displayed on the top line for comparative analysis.

01:30

Market participation and activity levels

01:30

The six pedometer indicator provides insight into market participation and activity levels by showing color-coded signals: red indicates low activity and sluggish markets, orange represents average activity, and green highlights high activity. This helps traders gauge market liveliness and volume trends. The indicator can be applied across different timeframes, with orange being the typical norm punctuated by occasional green spikes signaling increased activity. Persistent red suggests market inactivity. Additionally, the volume point of control, shown as a yellow line on the chart, marks areas of congestion where high trading volume accumulates, explaining periods of market stagnation.

02:49

Volume concentration and market profile

02:49

The market is currently trading around a key volume-congested area, leading to limited movement as it balances between bullish and bearish sentiments. This congestion is explained using market profile principles, likening the market to a seesaw with equal weight on both sides. Momentum and price movement begin when one side gains advantage, indicated by changes in volume and speedometer colors. Additionally, there are notable price resistance levels represented by a red dashed line on the chart.

03:42

Support, resistance, and bearish trend

03:42

The accumulation distribution indicator signals a warning from a price perspective, highlighting key support and resistance levels based on both volume and price. The trend monitor displays a strong bearish signal across all three indicators. Despite this, the daily charts reveal that price activity is currently confined within a narrow trading range.

04:13

Nasdaq’s role in economic cycles

04:13

The discussion focuses on the Nasdaq as a leading economic indicator due to its technology-heavy composition. Typically, during early expansion phases after a recession, companies invest heavily in technology and equipment, which drives growth in the Nasdaq. Currently, the Nasdaq is showing signs of slowdown with narrowing price spreads and lack of strong upward momentum. There is noticeable market nervousness reflected in both price action and volume over recent days. Despite decent volume levels, prices are stagnating and moving away from last week’s highs. In contrast, other indices like the YM and S&P 500 have shown some upward movement with acceptable volume, indicating a mixed market picture.

06:20

Narrow price spreads and market nervousness

06:20

The speaker reflects on whether the current market behavior may be forming a pause or a potential reaction against prevailing negativity. They then shift focus to analyzing the VIX index, presenting various intraday charts including one-minute, three-minute, five-minute, and daily views. The speaker attempts to display the daily chart on TradingView to better illustrate the trend, noting some technical difficulties in switching views.

07:18

VIX levels indicate trader caution

07:18

The VIX index is currently maintaining a relatively high level around 25-26, despite a strong market rally. This suggests ongoing market nervousness, as the balance of puts and calls indicates many investors are still buying protective puts. The pandemic’s uneven impact on industries means some sectors are struggling while others have thrived, complicating the overall economic outlook. The sustained elevated VIX level may signal that the rally is pausing, reflecting uncertainty about the long-term recovery and market participation.

09:31

Yen rallies vs risk asset divergence

09:31

The market is experiencing highly volatile and explosive movements, described as ‘rampaging’ higher. These significant price surges represent major opportunities to profit, especially on rare, big money days highlighted in the trading room. However, there is a notable divergence where yen and PES are rapidly increasing, while other risk asset classes are not following the same pattern. This unusual behavior raises caution and signals that something may be amiss in the market dynamics, based on over 20 years of experience.

11:05

Trading strategies amid market uncertainty

11:05

The speaker discusses approaches to trading and investing under current market conditions. Intraday traders focus on capitalizing on market fluctuations, while investors might consider reducing exposure or shifting to less risky assets, possibly hedging to protect investments. The commentary emphasizes understanding daily market dynamics and global factors reflected in charts. The speaker also notes a developing market move with potential momentum and mentions monitoring the VIX before transitioning to another topic.

By Anna Coulling – creator of volume price analysis