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Olympics Begin & Nasdaq at ATH – July 23, 2021

MARKET COMMENTARY – Outlook – EXPECT WHIPSAW -BROAD BULLISH STANCE still holds‘buy the dip’ still in force, as traders recapture every tick of the last fade. Covid outbreaks are making the news cycle, but the narrative international inflows into the best-performing markets (US markets) will bring ‘buy the dip’. Earnings show beating most expectations. Traders are now working through the resistance levels in the dollar through 93 and will battle in this range as it is an important one; squeezes in currencies can go for a while, so use care thinking about dollar shorting. Repurchasing window activity is still at the highest levels ever seen- now being ignored, in general. The liquidation breaks are still possible as volatility is in a whipsaw, but buying pressure is strong from below. Designing short plays in this market means waiting for resistance but is now more feasible in the current drift into support below.

Observations

  • Summer Fridays are generally bullish
  • Dollar breaches 93 but breakaway not likely here
  • Earnings continue to show strong gains with 80% beating expectations while sharing inflation concerns
  • Support floor at 4220-4206 gives us support edges and heavy congestion
  • Bifurcated markets remain the order of the day – but this also is fading and more stocks are catching
  • Oil recovers 71 but is likely to test higher support before moving forward
  • Gold loses 1800
  • Deep support edges on approach 4265 and 4234 both failed and recaptured so those will be near term supports today
  • Input and materials pricing makes for some difficult earnings releases- 85% of companies are discussing inflaction issues
  • Bitcoin loses 30K but recovers
  • From our swing positions we will continue to feed into industrial metals – uranium, lithium, tin and copper on deep dips

Support holds across the board BUT broad views show reversion to the mean on the broader landscape. The pressure for buyers to now HOLD support zones between 4339 and 4311 – and resistance at the prior highs and the break of 4400. New support edges sit near 4339 and 4358 Cautious trading ahead -buyers will show up in general at weekly lows or deep support but not before. Short trades become countertrend once more.

My MotiveWave platform

When we see news about the bond markets, we need to keep on high alert. And there is quite a bit of news here, though currently subdued as the dollar fades (this is what the Fed wants). Remember that credit rules the world; however, the media shapes the narrative of what is happening, so pay attention to price action first- not what the media is painting.

As always, we will listen but not assume the news will do something- it remains important to follow quickly and not predict.

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.

Remember your OODA loop – OBSERVE, ORIENT, DECIDE, ACT

  • What do you see?
    • This means -is my trend in continuation or do I see signs of a reversal motion?
  • Where were the buyers last engaged if they were value buyers?
    • This means -is my price action far from the last region that value buyers engaged or it is in that congestion?
  • Where were the sellers last engaged if they were value sellers?
    • This means -is my price action far from the last region that value sellers engaged or it is in that congestion?
  • Who won the last strategic price battle- buyers or sellers? This answers the big question of trend
  • Have we tested significant levels of support or resistance? This answers the question of whether we are near a critical pivot
  • What is the relative trend?
    • This means – relative to the day at hand, who is forcing the most pressure on price? Look at your moving averages to tell you this
  • Have you established risk relative to-
    • 1) the last battle won and
    • 2) the relative trend? This answers the question of how far you are away from strong support or strong resistance

PAY ATTENTION TO YOUR STOPS.

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 larger timeframe. 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.

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THINKORSWIM USERS –

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

LINK FOR THE TRADING DATA EXCEL SPREADSHEET – updated

Video to describe how to read the spreadsheet

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 have resumed some dominance.

Intraday LONG trading from support edges like ABOVE the RISING VWAP or tight moving averages will give you the least risk event for engaging – removing your trade at resistance will allow you to participate in level-to-level trading – 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 BELOW the FALLING VWAP, the old highs or bigger moving averages will give you the least risk event for engaging. Follow the candle trend until candles stop breaking lower. Removing your trade at visible support levels will allow you to participate in level-to-level trading – understanding that countertrend bounces can be swift and sharp but will likely fail under the broken structure of the market. This means that your trades in the opposite direction of trade flow will need to be quick

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.

DAILY CHART
CL_F

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