A Daily Swing Trade

The Herrick Payoff Index determines the amount of money flowing into or out of a futures contract by analyzing volume, price changes, and open interest changes.

When the Herrick Payoff Index is above zero it shows that money is flowing into the futures contract. When the Index is below zero it shows that money is flowing out of the futures contract.
The value of each new day is combined with the value of the previous day using a multiplying factor. Since this is a cumulative indicator the value at the beginning of the data series is zero. The value will primarily increase and decrease with the average price for each day, the amount regulated by the trading volume, changes in the number of open contracts, and changes in the average price.

The primary signal to watch for is a divergence from the price. If prices are increasing and the indicator is decreasing, prices will typically correct to confirm the indicator.

- Dow trends higher throughout session, tests 11,200.
- NASDAQ and S&P each pushed steadily higher throughout the session today and are now approaching key resistance. Watch these zones closely tomorrow for direction.

Summary

The Dow ended the day at the highs of the session after pushing steadily higher throughout the day. The index closed the day testing key resistance at 11,200, which indicates optimism in the market. Watch 11,250 for a break to indicate continued strength in the near-term. Otherwise, a break back below 11,150 will make for another cause for selling within the range.

- Dow trades sideways within range, continues building toward a breakout.
- NASDAQ and S&P each put in new lows today and have now expanded their respective trading ranges. Look to these ranges for key direction.

Summary

The Dow closed today's volatile session with a mild gain and continues to hold firmly within the boundaries of the developing consolidation. This consolidation is clearly the pattern to watch for the next big medium term move. Watch 11,200 and 11,025 for early signs of a breakout move.

Fibonacci Retracements are displayed by first drawing a trendline between two extreme points, i.e. a trough and opposing peak. A series of horizontal lines are drawn intersecting the trendline at the Fibonacci levels.

After a significant price move in either up or down direction, prices will often give back a significant portion (if not all) of the original move. As prices retrace, look for support and resistance levels often occurring at or near the Fibonacci Retracement levels.

- Dow holds at 11,200, stays within clear trading range.
- NASDAQ and S&P each pulled back from early highs today, but continue to build out within the boundaries of a potential continuation range. Watch this range closely for key direction ahead.

Summary

The Dow closed the day with a steady drop from intraday resistance at 11,200. The index continues to build out within the boundaries of the large consolidation from 11,040 to 11,200, which we will continue to watch for the big breakout. Watch this range closely.

- Dow trades back and forth at lows, winds up within clear triangle.
- NASDAQ and S&P traded sideways for much of the session today and are now forming key triangle consolidations. Watch these patterns for key medium term direction.

Summary

The Dow closed the day within the boundaries of a coiling triangle consolidation. This triangle is the next pattern that will spark big movement in this index and possibly to the upside. Watch it closely.