Week of 8/4/2024
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Last week was an absolutely wild week which was no surprise given the key earnings and economic calendar. Both SPY 0.00%↑ and QQQ 0.00%↑ were trading in a box and our trades were focused on that. I had made the decision to wait until after Thursday to have any kind of bias and that was clearly the right decision. As of Tuesday, sellers appeared to be in full control only to be completely destroyed on Wednesday. As of Wednesday, we had numerous calls for new all-time highs directly, and on Thursday buyers were completely rugged.
This week’s recap will focus on NQ/QQQ as it has been in the driver’s seat for some time. I believe it demonstrates the importance of remaining nimble and avoiding bias, during key weeks in particular. I provided some commentary around NQ in last week’s plan and have included it here along with a recap to discuss and illustrate the need to be adaptive.
On Tuesday sellers failed to gain traction below the prior week low (18.883.25) during cash hours. Price was in a tenuous spot into MSFT 0.00%↑ and AMD 0.00%↑ earnings sitting below 19030. Sellers again failed to gain any traction between the two earnings reports and a massive rally took place Tuesday night into Wednesday. Wednesday evening saw NQ trade into the perfect lower high short setup- the massive 650-690 range and just under the 730 prior box bottom. This is nearly the same exact setup as the ES 5620s short the prior week. The overnight high was 717 and the Thursday cash hours high was 682. After non-stop selling, price settled between the prior week low and 19030-19100, building volume/value for the second time for the week. The Thursday overnight session finally saw lower highs and lower lows below the prior week low. The stone cold NFP really was secondary, and price began its path to the 18303 target before the data.
Both SPY 0.00%↑ and QQQ 0.00%↑ are coming into some critical areas. Sellers are in full control until proven otherwise. It is likely that we see a counter trend rally soon. The question we will have to answer is whether or not this is a low to produce a new all-time high, or if we will sell the rip to new lows after the rally.
The ES premarket low on Friday was 5376.5 which was a level I had proposed a number of weeks ago. It was quite reactive and is now relevant from below. A number of people had asked where that came from so I’ve done a quick video on it here 5376.5
Be sure that you have read the free series I’ve started introducing Volume/Market Profile. I will continue to add archives of free content as it will be easier to find than searching for old Substack posts. You can find it halfway down the page at the following link PharmD Capital