MARKET COMMENTARY– The break of the range into the close continued into the overnight and today we see the upper target into the 3274 levels in the ES_F. Earnings beats hold as analysts undercut estimates to create upside and optimistic releases. The biggest news is that traders are delighted that the EU has finally inked a packed to help the zone with recovery. Leading stocks will lead us all the way up and they will lead us on the way down. Sector rotations into financials and continued interest in the healthcare stocks and out of tech – keep watching the leaders. Retracing to higher lows once more implies the grind higher is intact. Highs seen early last week have not been breached. The Nasdaq continues to be weaker than the rest of late. When leaders lag, we also see a cautionary tone.
Though the NQ_F worked hard to recover much of its losses from last week, it is still underperforming (compared to its normal behavior). The tumble in volatility measured by the VIX and VXX confirms that we will attempt to grind higher. We have slipped into a trending cycle without a good retrace. This makes for a bit of a messy situation. As far as the broad market indices go, we remain in a day trading cycle with no swings setting up just yet. We will have intraday longs and intraday shorts and we will continue to take profit rather than wait for continued upside pressure. BE CAREFUL shorting between major targets – the markets are still bullish.
Gold’s unreliable upward pattern broke 1800 but has recovered and has risen into prior resistance of 1830, volatility readings are below the 30 region- making bullish action much more likely. The dollar remains depressed but has not broken its low. There is a MONSTER battle occurring in the world of currency.
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If you find yourself being chopped up, widen your time frame or take time away from your screens. This is a time when less is more.
TRADING VIEW & ACTION PLAN
The wait state broke through with our test and hold of 3238 yesterday and the ‘buying to cover’ for short traders as well as the ‘buying to open’ for traders buying the breakouts. As long as we hold or recover the area near 3236.5 after any fades, we remain in a path that shifts us north and we are much more likely to trend back into 3300 and beyond, else we slip back into the shorting zones and supports in our range near 3158 and lower. Though we have moved into trending formations, we should be careful adding to positions or holding positions that do not move properly into targets.
Intraday LONG trading from support edges like ABOVE the VWAP or tight moving averages will give you the least risk event for engaging – removing your trade at resistance will allow you to participate – understanding that countertrend bounces can be swift and sharp but will likely fail under the broken structure of the market.
Intraday SHORT trading from resistance edges like the old highs or bigger moving averages will give you the least risk event for engaging. Follow the candle trend until candles stop breaking higher.
Here’s a link to the METASTOCK software– you can have your own copy of Metastock to run these tests and setups using Target Rich Trades.
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