Market Analysis and Trades for 8/11

Front-run the Breakout or Punish the Failed Breakout?

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The weekly post for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Market Analysis for the Week of 8/10

Bulls are well-positioned to attempt an upside break of this multi-week balance after last week sellers were well-positioned for a downside break.

It is reasonable to consider this to be bullish consolidation until proven otherwise. My initial bias for Monday will be to buy dips to give buyers a shot at an upside break with continuation. However, we saw last week that on an intraday basis remaining nimble is prudent. We see on the below 24-hour RTH only chart the clear back and forth with alternating red and green days since the 8/1 low. Note that none of the days since took out a prior day low on an RTH basis. I made note of this in the plan for Friday above the paywall. While many were calling Thursday a lower high, this simple view can keep one from falling into that trap.

Caution on the long side is warranted as price approaches the top of this range, as initiative buyers will need to prove a willingness to lift this range, but sellers have much to prove. In my opinion reaction is far more lucrative than prediction. There are solid setups for Monday to front-run an upside break, and we will be prepared to flip short or at least become guarded on a failure from buyers. Shorts are “rentals” to me for now, until sellers can at least find traction below a prior day low within this range.

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