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The money, obviously, was going to the downside. There is lots of selling pressure in the market. The market has dropped dramatically. It has gone down from 12,600, all the way to 12,300. There is a tremendous amount of selling pressure here.
If you look at price alone, you wouldn't really be able to determine the fact that there was a very smooth amount of selling going on in the market, on a five minute-by-minute basis here. If you looked at this indicator, you could see that it was a very steady increasing in selling pressure throughout the day so far.
That may change, who knows, but you can see that this divergence here... If you chase this increase in price around here, and you thought that prices were stabilizing and going higher, and you went long, you would have been very disappointed. The volume did not confirm it. Prices actually started selling off, from that point.
It will help prevent you from entering into positions that - let's say you were doing a three-legged box, like we were doing this past week. If you go into the daily reviews, if you're looking at this in the future, you would want to access the daily review for June 5, 2008, to learn more about the three-legged box.
In any case, when you're putting on a three-legged box, what you want to try to do is get into a position on the long side - either calls or puts - early enough so that you can actually lock in your profits on that trade. We did it twice this week. We only had to wait about 15 or 20 minutes on each trade to lock in our profits.
At that point, it doesn't matter what the market does. You have your profits locked in. Actually, you have the potential for an unlimited profit on the other side of the trade.
This is what I call the Happy Family indicator. Whether you like that name or not, that's okay. You can name it whatever you want. These are the children, that's the mom, and that's the dad. If they don't all agree with each other, you have a very unhappy family.
The father did not agree with this move up. The mother moved up, and the children moved up, but the father said, "Hold it, guys. This may not be such a good idea." In fact, the market did go down again after that.
This is how I use this indicator. I put all of these three up together. It's very easy to do. In order to do this, you have to use the charts that come with the Think or Swim platform. If you're using another platform, you can probably use those charts as well.
All you have to do is... This is a window detachment button, right here in the upper right-hand corner. Just click on that. You can size it to whatever you want. Then you simply type in the symbols. Make sure you include the minus sign. Hit enter, and it will automatically give you those numbers.
I use the 5-minute chart. You can use the 15-minute chart, if you like. You can see that the selling pressure has been extremely steady on the 15-minute chart.
You cannot use the daily chart, though, because it will give you this. It's not a particularly attractive graph. This is really for short-term trading, and that's why I use the 5-minute chart. If you are really into it, if you're really into day trading, or something else like that, you will find this to be a much better indicator.
Almost every indicator that you can possibly use is a lagging indicator. In other words, they measure price, and then they go backward to average that price, in order to come up with the number for their indicator. These are indicators in real time, based on current market internals. There is no smoothing going on with these indicators.
That's all you have to do. You just enter that, and you enter the symbols. This is the advancing issues.
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