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Charts Stall – FOMC week ahead & Earnings Grind- Jul 27, 2020

MARKET COMMENTARY– We closed the week below 3225 – a key level to watch. How well we hold 3192 (whether we lose it and recapture or lose it and fade lower) will tell the tale for the coming moves. As said many times over, leading stocks will lead us all the way up and they will lead us on the way down. We need to see how these recapture their prior highs. Sector rotations into financials and continued interest in the healthcare stocks and out of tech – keep watching the leaders. We are very frothy- and participants are trimming gains. Retracing to higher lows once more implies the grind higher is intact. We breached the high and moved into showing a resistance edge of 3284. The Nasdaq continues to be weaker than the rest of late. When leaders lag, we also see a cautionary tone.

Markets are lifting but as before, the NQ_F underperforms, the VIX holds its bounce. Divergent undercurrents still exist. When we slip into trending zones without a proper retrace, and this creates weakness. This makes for a bit of a messy situation and likely why we are retracing a bit. 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 is now in full breakout, volatility readings are still below the 30 region- making bullish action much more likely in the broad market. The dollar remains depressed and is sharply lower today. There is a MONSTER battle occurring in the world of currency.

THIS WEEK’S LIVE TRADING ROOM LINK

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This week’s calendar

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Econoday Calendar

********If you feel you need some help understanding how price moves, remember you have the COACH’S CORNER for video review.

THINKORSWIM USERS –Chart share links for ES_F , NQ_F , YM_F , CL_F , GC_F – levels here for download to the ThinkorSwim platform

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TRADING LEVELS

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
We are in trending breakout but without a signal of strength. This is a cautious long grind. As long as we hold or recover the area near 3246.5 after any fades (we have broken this), 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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Target Rich Trades from MetaStock

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