The market was completely focused on the "discount geopolitical news" trade today. Regardless of any technical or fundamental reasons and the recent pullback, that seemed to be working lower, the stock indexes love to go long on sell offs around geopolitical news. I would describe this mindset as greedy/contrarian. The benefit of day trading is that you can get away with it.
The logic is based on the idea that once the missles are launched, you should go long based on 1 of 2 cases: 1.) if the world ends it won't matter or 2.) if missles are not launched or if they are intercepted, or if there is a peaceful resolution, the market will rally. It seems a bit haphazard, and we don't have a trading system for this, but maybe we will in the future. There is not a data point that shows up as "Geopolitical Risk = True" to backtests but we can certainly observe these news events over time.
The One Million MNS 105 was up +0.12% today and the 250K Portfolio was up $240 on the day in live trading.
The Stock Index Portfolio 18 hypotheticals were +5425 per E-mini in the E-mini and +542.50 on the day in the Micros for a decent bounce on just two Nasdaq trades on the day.
The Nasdaq futures were at 20,382 about 28 minutes before the opening bell. The Nasdaq was able to rally above 20,500 by the open and support 20,500 once again intra-day (day session). It is interesting how the market seems to discount bad news and only focus on the narrative that it wants to hear.
The Advance Decline line opened weak today and made a low of -1400 and made it back to +5 but closed below 0. The VIX was up today and rising at the close. The high on the TICK was +678 and low on the TICK was -1424. All three factors are typically bearish. The Nasdaq, S&P and Russell rallied off the lows and closed up today. The market internals and indexes are out of sync with the indexes and generate fewer signals for strategies that depend on those. It continues to point to a narrow rally and stealth bull market mode.
One of the patterns we discussed recently has been how the market moves up at night and sideways to down during the day. Lately, that pattern has somewhat "mean reverted" and has been down at night and up during the day. Could that mean the trend is down? Is the real trend at night while the counter occurs during the day?
NVDA earnings are tomorrow after the bell and the market may move its focus back to market fundamentals tomorrow. The price action in NVDA has a way of moving the entire market. Be careful with positions after 4:00 pm EST tomorrow!
The cycle for some stronger and more extended pullbacks is well overdue on a technical basis but it doesn't mean we will see any sort of pullbacks in the short term, although it would not surprise me and a test of 20,000 before year end, especially if NVDA disappoints would be some interesting price action to watch.
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