Market Analysis and Trades for 7/9
Who's Been Lying?
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The weekly post for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. It can be found here Trapped: Market Analysis for the Week of 7/5
The setup for today was to short ES on a look above and fail of 7559-7561. The Asia session was cooperative in playing this out in a reasonably clean manner, which resolved for nearly 100 handles to the overnight low.
The trade was already well underway before the news from premarket triggered a liquidation break straight through multiple levels to the major 7472-7476 level.
Sellers were not able to find any traction lower, but ES still opened on a true gap down. It was honestly one of the hardest true gaps I can recall trading. One very subtle clue, which rarely happens, is even though ES traded mostly above its open and entirely above its 5-minute OR low for the first hour, SPX didn’t trade above its open at all. I also didn’t like the character of the buying.
The NQ short setup worked last night but the Asia session made it quite difficult. Regardless, the liquidation break on the news took NQ into our next two areas of interest below 29269-29238 which had potential to trigger a reclaim.
We got 181 and 161 taken out and 28945-28969 / 29045-29069 reclaimed triggering a rally back to 29269-29328. Like ES, this open was brutal but finally broke to the downside back to 29045-29069 where it was time to cover shorts and at least consider longs. We had some puts from yesterday which were up 200%+ at the low. Outside of some kind of bottom snipe, there wasn’t really a great way to get into that long. It based in a very small way for a short period of time and then was up only. I personally got long at 29049 which at the time was low probability/high reward but is easier to do since I’m short MNQ from 30K+.
While NQ spiked to new high of day into the close, I actually did not like to see that. It looked very trappy to me, and sure enough we saw a 150-handle pullback after the bell on Iran news.
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