Market Analysis and Trades for 8/12

The Trap Has Been Set, but For Which Side?

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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

Today was rather awkward so I wouldn’t be too torn up if you had a rough day. My plan A was to long a dip and be cautious on rips (particularly into ES 6431-6435 which has been the effective top of range for this balance) and simply be reactive if sellers showed up. The problem was, there wasn’t really a dip to get long until after the failed rip into 6431-6435. The premarket update may seem a bit nuanced, but buyers have been strong on deeper technical dips. A random 6408.5 overnight low was unlikely to recruit strong enough buyers to lift 6431-6435.

Note the significant volume that traded into the 6431-6435 test that was met by sellers. Once Friday’s high and the IB high were offered from below, new low of day with potential for low 6390s by tomorrow was reasonable:

(don’t mind the joke about circuit breakers)

We have CPI in the morning so stronger buyers can be forgiven taking the day off. They have to show up tomorrow to defend a key level below today’s low which could serve as the trap which sets off new highs. If it fails to hold, then matter get somewhat interesting for the rest of the week as this would represent a failure at the top of the range.

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