The Trader Daily

 | Mar 25, 2014 | 7:45 AM EDT
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Having spent the past two-plus years constructing daily trade plans for S&P 500 E-Mini futures traders on Real Money Pro, I'm thrilled to be switching gears and re-engaging with Real Money readers.

I know many of you are already familiar with my work and style of trading, but for those that are not, allow me to offer a quick primer. To begin, I'm an active intraday trader focused primarily on equity index products (ETFs and futures), commodities (metals and oils) and whatever is especially active in the world of equities. And like most daytraders, I rely almost exclusively on charts, pattern recognition and technical analysis.

But unlike most traders, I also really heavily on volume profiling. For those unfamiliar with volume profiling, I'd encourage you to scroll back through the Real Money archives and read through the series of articles I posted between Jan. 6-16. In addition to a basic glossary of market and volume profiling terms, these articles will guide you through the basics of volume profile and clearly illustrate how this discipline can dramatically improve your understanding and awareness of what the market is trying to do (and how well it is doing it).

What about fundamentals?

When it comes to short-term, intraday trading, I'm not the slightest bit concerned with a company's fundamentals. Intraday trading has more to do with momentum (or news flow), sentiment, technicals and tempo. The bottom line is that a company's balance sheet, price-to-earnings ratio, growth rate and sales figures don't matter a whit if I am only concerned with how it performs over the next 10 minutes to two hours. Valuations matter, but generally not to the short-term, intraday speculator. Like most things in life, context and timeframe are key. 

Let's move on to some charts.

The chart below is a five minute volume profile chart of the SPDR S&P 500 ETF (SPY). Now, before you review the chart I want to explain the different colored lines you'll see. I label my charts with black, blue and red horizontal lines. The black lines identify areas of minor/moderate importance. The blue lines represent more meaningful areas of supply and demand. And the red lines are used to identify areas that I consider to be (timeframe specific) lines in the sand. Those accustomed to reading my RealMoney Pro trade plans will recognize the black lines as single star (*) levels, the blue as double star levels (**) and the red lines as triple star (***) levels.

In general, anyone that isn't an aggressive scalper would be well served to simply ignore the black lines and focus the bulk of their attention on the blue (**) and red (***) lines. As with anything, ask a question if something is unclear.

5 Minutes SPY Volume Profile
Source: eSignal

As you can see on the chart above, I outline my expectations for how the SPY will trade as it pushes through, or is rejected from, a pivotal area. So, in regards to Tuesday's intraday trading, my current expectation is that all trading above 185.95/186.07 will encourage day timeframe participants to bid the SPY up toward 186.74 and 187.19. Some degree of reaction (push-back) would be expected from 187.19, but as long as bids remain deep against 186.74, I'd expect the immediate-term trend to remain higher.

It's worth noting that I generally use 15-minute or 30-minute charts for trend direction and three-minute or five-minute charts for execution. So, if reviewing the SPY chart above, I would suggest that a fifteen-minute or thirty-minute chart bar close above 185.95/186.07 would need to be seen to expect buyers to continue to auction prices up toward 186.74 and 187.19.

Despite my obvious focus on intraday trading, my analysis always begins with a study of the daily and weekly charts. So, review the daily charts of the SPY, IWM and QQQ below, along with my attached comments, and feel free to posts your own thoughts in the comments section below.

Daily SPY Volume Profile
Source: eSignal
Daily IWM Volume Profile
Source: eSignal
Daily QQQ Volume Profile
Source: eSignal

Any trading or volume profile related questions can be posted in the comments section below, e-mailed to me at or posted to my twitter feed @ByrneRWS.

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