Market Analysis and Trades for 7/9

Balance Leads to Trend

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The weekly post for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to Market Analysis for The Week Ahead

After yesterday brought the daily timeframe into balance, we had a super clean balance day today. Most traders dislike balance days, but if you are adept at trading both sides of the tape and have correctly defined the edges (my job) then they can be extremely profitable. The weekly 6264-6266 spot provided the lower edge, and the daily 6282.5-6284 spot provided the upper edge. The IB (initial balance or range of the first 60 minutes) was 6263.75 to 6284.25. This was a perfect location to fade the edges and the failed breaks all day. Certainly, the best two trades were the look below and fail of the IB low and the look above and fail of the IB high.

Bulls have dragged value slightly higher relative to last week, but Thursday’s range continues to be rejected. Consolidation should be presumed bullish until proven otherwise. We could still make a new low of week in the next few days and this would remain true. There is typically one juicy trade that comes following a period of balance. Monitoring the development of balance and correctly identifying the edges (both intraday and the broader balance) is key to catching this trade.

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