Market Analysis and Trades for 8/18

Here Comes the Trap

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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 8/17

NQ had been relatively week after putting in a “good high” on Wednesday. YM broke a key structural area and went a bit crazy to the upside so non-tech components held ES relatively firm. I was therefore more interested in shorts on NQ into Friday.

Fading the fail of the upper edge overnight (red arrow) offered the best and most sweat-free entry for those trading at that time. Notice the liquidation break at the open, followed by a re-offer on the back test triggering a second wave of selling. This was the next best entry for the short.

Keep in mind that long liquidations strengthen, not weaken the market. This, and any potential further liquidation serves only to give stronger bulls an opportunity to find a daily higher low. While a change in character out of OPEX is not uncommon, my plan A is to look for this daily higher low. Plan B will be to simply react and join sellers should they prove themselves this week.

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