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Indices Diverge- Nov 10, 2020

MARKET COMMENTARY -This morning in unusual moves, we see the indices diverging with the NQ_F (Nasdaq) down sharply again while the YM_F(Dow) is up over 2% while the ES_F (S&P) lags just behind the DOW. We should slog around here with motion inside a range. Markets gave much of the vaccine news spike back but we still hold overall in breakout territory. Again, I urge you to separate your political affiliations and whatever other emotions are sitting in your head when you trade. It will cloud your ability to read signals. BE PATIENT AND WAIT FOR YOUR PRICES to give you the edge. Intraday formations are the ones governing the charts.


The ES_F gave back much of the move but still sits in the breakout Deep fades into known support (3525) remain as zones to see buyers come in. Remember to wait for price to tell you what is happening. Buyers are in charge. Pay attention to the VWAP. Once we drift below that line and fail to recapture it, sellers will be bold in their attack to drive prices deeper.

The NQ_F moved right to the edge of expected moves and is now retreating all the way to the other side of the expected move in unusual weakness. The divergence in patterns between the ES and NQ shows us sector rotation and the recent strength in YM shows that foreign money may be moving in. Be careful in the moves and try not to buy breakouts before they confirm (or breakdowns for that matter) but look for the tight motion in the retrace to support before moving ahead. PAY ATTENTION TO YOUR STOPS.

The CL_F and GC_F breaks fell into deep support and are now approaching the recovery zones. For oil, that level to recover is 37. And for gold, it is 1936. As we sit, gold just had a 60 point drop – 60 points is 600 ticks and $6000 per contract. That is big as the dollar came into critical support and found buyers. Bitcoin is still in a steep rally. Oil has tested 40 but still in a recovery formation.

Watch the VWAP to help you with the strength of pressure. The loss of the VWAP will force some selling action, and the breach above the VWAP that holds will bring buyers to attempt stronger positioning.

INTRADAY -Keep an eye on the daily resistance and support that we discussed and expect battles at these regions as buyers have a lot to prove to maintain bullish price flow on monthly formations- technical damage is present but likely to be repaired on this large time frame. BIG time frames will help you position with the wind at your back.

Deep dips remain staging grounds in an essentially sideways week prior- quick strikes to support and back to resistance appear to be the highest probability for success today- dips could certainly get deeper as price action shifts to bearish mode finding to locate deeper support tests.

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********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-remain the same

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.

Pure breakout action showing -showing a little shallow fade currently.

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 – NQ_F

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