Key Intraday Levels & Pivot Points

The “Key Intraday Levels” indicator was created by Dr. Winton Felt. He also coined the term “Key Intraday Levels.” The method of calculating key intraday levels is proprietary. Hence, the data is not available elsewhere. This indicator is new, and was introduced in September of 2015.

The key intraday levels we publish can give a high-probability indication of whether an index is going to close higher or lower, but not the magnitude of the change. There is no indication of the magnitude of the expected move, only that the index will probably close with a gain or loss.

If the Index can stay above the key bullish intraday level for at least 30 of the first 60 minutes, it is unlikely that the market will work against bullish investments during the day. Likewise, if the Index is below the key bearish intraday level for at least 30 of the first 60 minutes, it is unlikely that the market will work against bearish investments during the day. If we indicate a probability figure of 80% for a higher close, the implication is that there is a 20% probability for a lower close, and the less probable does happen some of the time. Also, probabilities are estimates that may fluctuate over time. If the probability posted is 80%, it may be 70% or some other figure by the time a reader sees it. The figures are not updated in real time. They are updated once a day after the market closes based on data available at the time.

This information can be especially useful for day-traders and swing-traders. Even long-term investors can find this useful. Why would a long-term investor buy on a day when the market is likely to decline? It would be better if a new position did not have to “undo” the loss incurred on the first day of the position’s existence.

A move above a pivot point level of resistance (or below a pivot point level of support), on the other hand, requires a greater level of commitment than a sustained move beyond what we call our “key intraday levels.” A move above a pivot point level of resistance does not require persistence above that level for a specific amount of time to have significance. It simply is what it is. Penetration of a pivot point level of resistance or support indicates a greater commitment to the direction of movement leading to the penetration, but it does not indicate anything about whether the index will close on the other side of the pivot point level that has been penetrated. Neither a move above a key intraday level of more than 30 minutes of the first hour, nor a penetration of pivot resistance levels can guarantee the direction of market movement. It is just that the probabilities lean in the indicated direction. Generally, the key levels we publish can give an earlier indication of market sentiment than can be obtained from pivot point levels. An example of an exception would be if the market were to plunge at the open and remain severely depressed for the first hour. In a situation like that, key intraday levels and pivot point support levels would all be penetrated almost simultaneously.

Please bear in mind that the key intraday levels are calculated based on data available shortly after the market closes. Calculations assume that no news events will occur that change the probability profiles. News events can easily jerk the market around, and render our calculations obsolete minutes after the market opens or even before the market opens.

Helpful When There Is A Surprise Move

On this site, we give a probable range for the next day’s closing level as well as a probable range for the next day’s high (or low). In addition, we give a probable direction for the next day’s movement.

The probabilities are computed as of the close of market. Please remember that the size of the probable excursion envelope is the same whether the market rises or declines. If we say that there is “only a little more than a 15% probability that the Dow will gain more than 129 points,” that also means that if the Dow declines, there is only a little more than a 15% probability that it will lose more than 129 points.

First we compute the probable excursion envelope (in this case 129 points). That envelope carries with it the implication of either a + or a -. In making the computation that gives us 129 points, the direction is not defined. We then do some momentum studies and determine probable direction. If the probable direction is positive, we may say “There is a 70% probability that the Dow will rise no more than 129 points tomorrow.” If the probable direction is negative, we may say “There is a 70% probability that the Dow will decline no more than 129 points tomorrow.” The 70% probability number refers to the probable excursion of 129 points, not to the direction of the move.

If the direction turns out to be opposite to what we projected, then use the same data but with a minus sign. For example, if we say the Dow will likely go up no more than 12%, but in the first hour of the following day the Dow drops below the bearish Key Intraday Level and is below it for more than 30 minutes of the first hour, then there is a high probability that the Dow will decline rather than rise. In that case, the probability is that it will not decline more than 12% (the same percent we had previously indicated would be a probable limit on an advance).

Market sentiment changes quickly. It is important to be nimble enough to be able to reverse outlook and strategy quickly. That is why we created the Key Intraday Levels. The sentiment of the market at its close may be very different from its sentiment at the next open. We know that what we say in the evening may be wrong by morning. More precisely, the estimated direction may be wrong, but the probable excursion calculations will remain unchanged for the following day. Thus, the Key Intraday Levels can help a person avoid being at odds with the market.