I counted 11 noticeable bounces in the Nasdaq futures with little to no follow through to the upside on the bounces so far this week in 4 trading sessions. Monday and Tuesday's lows took out the previous day's low while Wednesday's low did not take out the previous day's lows. Today, new lows were hit 4 times with at least a 50 point bounce each time.
The constant bid in this market without an extended upside bounce this week, followed by additional shallow rollovers has made it difficult to trade. (If you have never heard of the Plunge Protection Team, it is an interesting read and concept.)
CPI was hotter than expected yesterday as was PPI final today. Inflation could reduce chances for rate cuts. Jay Powell spoke today at 3pm EST. The market was rangebound and choppy. Lately "events" have had trends instead of chop but there was no trend today during the Jay Powell speech, probably because the trend that the market needed was a down trend.
When a market remains bid, it is typically bullish, especially when VIX remains low, even if we are overbought. The last five trading days have been sideways. The VIX has plunged to the 13 handle, hitting July levels. The amount of time this market is going sideways, as well as the basis for the rally (during the night or no day trade margin), the continued weak market internals, as well as the Russell 2000's pullback, make this rally suspect. It would be healthy to see a pullback and mean reversion. We are ready to trade it either way though.
The One Million MNS 105 was -0.6% on the day while the 250K Portfolio down -$1,200. We are down about -1% on the month and -3% on the quarter.
The hypothetical results on the Stock Index Portfolio 18 was -$385 per E-mini and -$37.50 per Micro.
We have had a challenging month and the trading models are sitting at a worse case drawdown with the pre and post election cycle generating some different market intra-day patterns for an extended period. We will give it a Friday to "bounce" for more favorable price action since favorable price action happens in cycles. It has been more than a month since we have had favorable price action so we want to be in position during favorable market cycles while still managing risk.
Gold futures are a highlight with some nice shorts today. Today Gold hit its Fibonacci Retracement when looking at the front month futures and starting with the closings price from 2023. Will profit taking in Crypto and Tech flow into Gold?
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