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Selling Tail: Single Prints (Single Tpos) On The Top of A Profile A Gauge of Sellers' Reactions To A

Selling Tail refers to single trades that occur at the top of a price profile, indicating sellers' aggressive reaction to a higher price opportunity. Short covering occurs when traders close out short positions, which actually weakens the market by removing potential buying interest. Short covering rallies can be misleading if one doesn't understand that it represents old positions being closed, not new buying. Being "short in the hole" refers to traders who are short at unfavorable prices, often due to giving in to emotion rather than making decisions based on market structure and volume. A spike is a late price probe higher or lower that occurs too late in the day to be confirmed as accepted or rejected; the next day

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216 views2 pages

Selling Tail: Single Prints (Single Tpos) On The Top of A Profile A Gauge of Sellers' Reactions To A

Selling Tail refers to single trades that occur at the top of a price profile, indicating sellers' aggressive reaction to a higher price opportunity. Short covering occurs when traders close out short positions, which actually weakens the market by removing potential buying interest. Short covering rallies can be misleading if one doesn't understand that it represents old positions being closed, not new buying. Being "short in the hole" refers to traders who are short at unfavorable prices, often due to giving in to emotion rather than making decisions based on market structure and volume. A spike is a late price probe higher or lower that occurs too late in the day to be confirmed as accepted or rejected; the next day

Uploaded by

jadie ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as RTF, PDF, TXT or read online on Scribd
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Selling Tail

 Single prints (single TPOs) on the top of a profile; a gauge of sellers’ reactions to a
higher advertised price opportunity. The greater number of single TPOs that form the
selling tail the more aggressive the sellers’ reaction.

Short Covering Rally

We refer to short covering as “old business” because it is reversing earlier inventory.


Short covering actually weakens a market as it removes potential buying interest; you
cover a short by placing a buy order. The old adage is that a market may be too short
to break any farther and that it has to “rally before it can break”;  another way to view
short covering is an adjustment in inventory. Short covering rallies can be very violent
and misleading if you don’t understand the difference between old and new business.
Short covering occurs within every timeframe; day timeframe short covering may be
over quickly while longer timeframe short covering may last for much longer periods of
time.

Short-In-The Hole

Trader slang for traders who are short at bad prices; this usually occurs when emotion
takes over and the herd instinct is in full effect. Understanding market structure and
volume is, very often, a defense against getting caught “short in the hole”.

Spike

 A spike is a late price probe either to the upside or downside during the market’s two-
way auction process. It happens too late in the day to be verified as having been
accepted or rejected. For example, if an upside probe was rejected we would be left
with a selling tail. Similarly, if a downside probe was rejected a buying tail would
emerge. If the spike was accepted, price would trade within the range of the spike over
time. We are forced to await the market’s opening during the pit session of the
following day for the market’s verdict.

Spike Rules

Without placing the spike within any context the simple rules are:

Upward Spike
1. A price opening below an upward spike would be considered negative since the
price probe or spike was rejected leaving a selling tail.
2. Opening within a spike shows price acceptance and keeps the rally in tact; price
has found a level where two-sided trade is taking place—the price discovery
dream of all businesses.
3. Opening and trading above an upward spike reveals that price has not
auctioned (probed) high enough to cut off the buying allowing for two-sided
trade. The auction is not over.
4. The bottom of the spike is “support”; as you begin to think in terms of spikes you
will see how visible this reference is.
Downward spike
1. A price opening and trading above a downward spike would be considered
positive since the price probe or spike was rejected leaving a buying tail.
2. Opening within a spike shows price acceptance and keeps the break intact; price
has found a level where two sided trade can take place.
3. Opening and trading below a downward spike reveals that price has not
auctioned (probed) low enough to cut off the selling allowing for two-sided
trade. The auction is not over.
4. The top of the spike is “resistance”.

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