Trading System Signals on 07/23/2025

The price action in July has been some of the most difficult price action we have seen since December 2020. The volume has been some of the lowest in the 2020's and the ranges are comparable to 2019. The stop hunting environment of July has accelerated this month. Every type of price action from trend, to mean reversion, to stop hunting include cycles that can end in capitulation. Today's price action seemed extremely predatory (capitulation for stop hunting).

July could continue to remain difficult as we have seen questionable and harsh price action for an entire month at times. Earnings season has started with GOOGL and TSLA reporting today and FOMC is next week. This could generate some more tradeable price action into the end of the month or increase the sloppy price action.

Some of the best price action can follow some of the worse price action.

The bull move since April is one of the sloppiest, I have seen. The cycle for less sloppy price action is certainly due, regardless of direction. It "feels" like the stock indexes want to go parabolic and Nasdaq 100 is only 8% away from 25,000 and 30% away from 30,000. These are big moves but modest compared to past liquidity bubbles. Right now, it looks like a choppy move higher but it could turn into some sharper price action. At what price will the FOMO crowd get crazy? 25,000?

The hypothetical results for today's trade are:

Stock Index Portfolio 18 = -$3,590

Two System Portfolio NQ = -$1,165

We are near a worse case drawdown in the SI 18 and the time of month we are in has been one of the more favorable times to trade (from the 21st through the 2nd trading day of the following month has been 13 for 13 in the last 13 months for the SI 18). Using both price and time is one way to enter a trade or start a portfolio of trading systems.

The max drawdown in the Stock Index Portfolio 18 is 33,325 out of a maximum historical drawdown of 36,955. The risk to worse case drawdown is smaller during a drawdown than it is at equity peaks and we prefer to start or add contracts during a drawdown rather than at an equity peak.