coolhand
Well-known member
I was only pointing out some of the layers of this onion we call a market that can influence price action.
I don't monitor options that closely myself as I try to trade in intermediate term time frames, but I know that the daily action can affect our longer term perspective if we don't keep things in context. Context for me means to focus on the intermediate term and try not to let day to day action effect that perspective too much. Of course, if one is trading on a day to day basis this kind of information may become more centric to how they execute their trades. Liquidity is something most folks only hear about in the mainstream media. But it's not an easy thing to quantify as it's kept at a relatively high level in terms of information that's available to the general masses. Many traders think Permanent Market Open Operations (POMO) are the only measure of how liquidity expands and contracts in the open market, but I don't think that's true. Marty Chenard at Stocktiming.com has a proprietary method of determining liquidity action and I can tell by his charts that POMO alone cannot be the sole source of his methodology. Even when POMO has been zero, his charting can show liquidity at something other than zero. I have also come to know that for quite some time there has been a high correlation between liquidity and market price action. A lot of traders and money managers recognize this too and like me they frame their market perspective accordingly.
