Live Trading System Signals on August 19, 2022 - Short Signals were the Highlight in a Choppy Market


Right around breakeven on the day +/-$50 on the 200K and 50K Portfolio. There was a big move down day in the stock indexes. Most of the trend was overnight and first 20 minutes.


We had massive potential with a list of strategies getting short. The market just wouldn't continue down and there was choppy trade the rest of the day. The shorts were the highlight and profitable on the day. The 60M Breakout NQ was the biggest loser on the day.


We had equity peaks on Monday.


Tuesday, Wednesday, and Thursday were choppy with a rapid drawdown and drawdown alert.


This was a week where the market felt entitled to attack the shorts and keep the rally going. I was glad to see the sell off today and am looking forward to more selling in the market until the fundamentals resolve.


Even with broader market weakness seen in the Advance Decline line, the S&P was up on the week at the close on Wednesday even with an Advance Decline line that opened very weak on Monday, Tuesday and was at the -2000 level on Wednesday.


So while we have seen a divergence between price/technicals (bullish) and fundamentals (bearish). The Advance-Decline line displayed broader market weakness all week with very little weakness in the indexes on the week with the S&P down about 1%.


We are due for some strong selling. We don't always get what is due in this market though. I am flat over the weekend instead of holding the short on 60M Breakout E-mini S&P.


So far we have had a frustrating summer of trading with this market environment as well as external forces taking us out of our trading rhythm for awhile.


I am looking forward to some resolution in this market between the bullish psychology and the bearish fundamentals as well as market internals also showing some weakness this week.


I still believe the Fed's liquidity is the biggest fundamental factor causing the illegitimate prop up. The reduction so far in their balance sheet over the last 4 months is about one months worth of increases during QE. It is down 116 billion from an all time high of 8.9 trillion or about 1.3%.


So even with a long list of bearish fundamentals, we have to conclude that the Fed's balance sheet and a Fed Funds rate that is below historical average, that we still have easy and loose money policy. This is what is holding the market together right now and could ultimately drive it even higher.


This is why we prefer short term trading strategies.


We are still in a drawdown alert to add contracts or start trading and we are flat at the end of the day and ready for next week's trade. I will update the portfolio calculator this weekend.

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