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Markets Dip on Rising Short Yield Rates & the VIX in View – Feb 22, 2021

MARKET COMMENTARY – As my prior post mentioned, I am taking some time away from the live-action this week in order to take care of pressing family matters. We will return to our normal schedule next week.

Videos in the next post

Things to consider for the upcoming week

  • We have a weekly close lower than the prior with a rising VIX
  • We have Jerome Powell on the Hill and a potential stimulus package
  • Short term treasury yields are rising against long yields (translation- why should I take a longer term treasury when it gives me less yield-yes, not good)
  • We have low volume nodes down into the initial breakdown areas

We are still in a breakout formation that defended itself with retests of support that hold-so far, we hold above 3888-KEY SUPPORT-that is likely to be challenged if we fail to recapture 3920 in the ES_F

If you are newer, read The OODA loop. If used properly, it will confirm you are seeing things the right way. It is far better to be out of a trade you wish you were in than being in a trade you wish you were not. Stay present and in the near term, and pay attention to the players before you decide on a plan. BE PATIENT AND WAIT FOR YOUR PRICES to give you the edge. Intraday formations are the ones governing the charts – so use them.

**REDUX-Buyers are attempting to hold control after the fade into 3880- we hold in a bullish formation testing 3914 (arguing here today) and 3924-3950 into Feb expiry, BUT we could easily chop back and forth with thin profiles still in play. We have higher levels into 3972 now showing. Pay attention to the VWAP. Once we drift below that line intraday and fail to recapture it, sellers will be bold in their attack to drive prices deeper.

The NQ_F sits under the call wall at 13992 regions -however, the QQQ’s are now in negative gamma territory, suggesting greater selloff potential if it breaks support ranges near 330. Setting trades long at deep support regions remains the highest probabilities for all our indices. Only after seeing a failure to recover support should we be bearish in our approach to trade positioning. ZONE IN ON ARGUMENTS AT THE VWAP. They will determine future slope and direction. The internal participation levels continue to be mixed here so new highs within the index seem to be fading in some places while holding in others.

PAY ATTENTION TO YOUR STOPS.

Oil fades as expected into support. Gold and the dollar waffle as traders slip into Bitcoin and cryptocurrencies with greater flow.

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 for buyers- quick strikes to support and back to resistance appear to be the highest probability for success today- dips could certainly get deeper and spikes could get higher as price action shifts.

**********************************************************************TNo live room this week

PRIOR DAY’S LIVE TRADING ROOM RECORDING

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This week’s calendar

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Econoday Calendar for this week

********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-to be updated later today

LINK FOR THE TRADING DATA EXCEL SPREADSHEET

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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
Pullbacks can be deep-once support lines get lost – the lines will shift. Buyers are in a battle to resume dominance.

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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