Hypothetical Trading System Signals on June 17, 2022

We remain on the sidelines during extreme chop and prop price action. The market refuses to face reality in my opinion. The bullish liquidity thinks the market has gone down far enough when measuring drawdowns off its highs of around 24% on the S&P and 35% on the Nasdaq. I believe the mistake is using the bubble highs as a point of reference instead of where the market should be without Fed stimulus to begin with.

This mindset has caused massive chop in the market and the Fed hasn't reduced its balance sheet this month. Its balance sheet is actually up on the month.