Trade Plan for 12/06
Make or Break NFP
The weekly post for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to The Week Ahead
Be sure you have read the Trading Doggy Style Starter Kit. I will be adding to this over time, likely first focusing on example executions. Trading Doggy Style Starter Kit
It was required to be objectively constructive on price into today, but I had decided that I was done with longs. Yesterday I was seeing signs of early longs taking their exits with weak handed late longs providing their exit liquidity. This is how all swing highs form. Early longs exit into late longs, if late longs can’t get additional upside traction, more early longs will exit and early shorts will enter. This puts pressure on the late longs and they ultimately liquidate their positions. This then gives more savvy longs an opportunity to enter at better prices.
From last night:
NQ was into a major area of caution for me and it held again today.
My plan was to be short, or flat waiting to short. This was even while planning long setups as most traders should have been objectively focused on longs for today.
I took the short in the morning which worked, but ran into our long setup which was a hold of 6088-6093 range (6090.25 morning low). I wasn’t planning to take another short today after the failure from sellers to get through 6088. However, an extremely large seller showed up in the afternoon and completely changed the tape. It is possible that someone needed to exit ahead of tomorrow’s data, but it looks an awful lot like our big seller we call “Druck.” We’ll know more tomorrow.
At 1:18 EST a seemingly normal pullback turned into something much more as I spotted the first seller of size we have seen in many months. The manner of selling was very different and the tape changed for the rest of the day. We will monitor for this seller’s continued presence.
NFP tomorrow will of course decide, and depending on how it goes there may actually be a continuation short setup into next week which would go quite a bit against the consensus view of a major Santa rally. We will of course be prepared either way.