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The weekly plan should be read and the weekly video should be watched prior to reading this post. Weekly Prep and Video
I did a quick video on a Crude Oil setup and it can be found here. Crude/Energy Trade Setup
In last nights plan the ES box we are using for SPY 0.00%↑ was posted above the paywall. Free subscribers can choose to see the “recap” as a flex (it is), or glean some knowledge and trade ideas from it. This was another great example.
There wasn’t much reason for us to update our trade plan for today as the weekly short setup remained in force.
However, we were monitoring for a look below and fail of yesterday’s low if we traded lower first. This played out perfectly during the Asia session (never trust an early Asia sell off). Yesterday’s low was 5481, and the overnight low was 5479.5 before rallying in essentially a straight line nearly 30 handles.
As of last night’s writing, I was a bit hesitant to short the top of the box on ES if we traded first after having consolidated all day in the upper range. However, we had traded lower first overnight, which kept things interesting. We had discussed in the plan how exhausted the buyers could be getting having to continuously stage these large rallies and last night/ this morning was another example. The had to rally 30 handles off the lows, didn’t have the energy needed to lift the 5530s on ES and were forced to liquidate. The look above and fail of yesterday’s high was a sign of weakness for sellers to pounce and buyers never had a chance. This was when I reaffirmed my bias for shorting top of range. We got an outside day and more.
Sellers waited for the liquidation, then pressed below 74-79 (11:25 lower high 79.75) and forced a move to nearly the bottom of the box (5438 early afternoon low). In this case QQQ 0.00%↑ hit the bottom of its box first so SPY 0.00%↑ didn’t quite make it the last few handles until the reaction on MSFT 0.00%↑ earnings
As of the time of this writing, ES has held the bottom of its box, and NQ is back testing its box from below as AMD 0.00%↑ had a decent ER following the poorly received MSFT 0.00%↑ results.
Tomorrow we have FOMC, the Treasury Refunding Announcement, ADP employment, and Chicago PMI. We can expect some wild volatility. I do believe tomorrow will be critical to determining if this will be a continuation short or a swing low.
If you recall, I had covered my 5620s swing short when we tapped 5430s the first time. I could have sat in this position the whole time, wasting mental and ACTUAL capital. Instead, I was free to short the top of this box repeatedly. I will make a swing determination after tomorrow or Thursday.
The first 5 parts in my free series explaining some basic profile concepts is now available at www.pharmdcapital.com. Click PharmDCapital This section and other free material will be added to over time. Scroll down to the “Want a Taste” section to read it.
To learn more about how I trade, see the post “What is Trading Doggy Style” Here