Holding below half of yesterday’s candle
Today’s
session was tough because going into the day session, we knew that the bears
had rejected the 1HR 20EMA overnight. The pattern was suggesting a standard 1HR
20EMA bear train follow through for the day.
At the
day session open, the market quickly rallied back into the 1HR 20EMA resistance
and it was then quickly rejected once again like the overnight session. By
10:20AM, bears made a new intraday low but it was still above Monday’s LOD.
Bears lacked follow through because by 11:00AM the hourly candle closed as a
large bottom wick, which suggested a high possibility of a shakefest also known
as whipsaw range bound day. Scalpers had a field day by buying near/at the
range low and selling near/at the range high during the morning. We didn’t
trade much today since our first couple scalps at the open got stopped out
quickly and it whipsawed around. We find it quite fitting and amusing to have a
shakefest day after a relatively simple and easy Monday session.
What’s
next?
Daily
closed at 2077.25, this is the 14th consecutive close above the
daily 200SMA. This is also the second session that closed below the daily 8EMA
in 28 sessions.
Price
held below the half way point of Monday’s session and with daily 8EMA acting as
a major resistance. Consolidation favours short-term bears due to the Monday
breakdown bar.
As long
as price remains below 2085, the immediate targets are 2060-2057, 2051 and
2035.
If above
2085, then the immediate targets are back to 2092, 2100 and 2110.
Technically
speaking, the 61.8% fib retracement is at 2091.82 which mean bulls could
retrace to that level and then bears could reject form a possible lower high
setup. However, we think that by that point bears really lost the battle as momentum
already reversed. This is just something to keep in mind as the market
undergoes this temporary pullback/consolidation phase.
It would
be an amazing feat by the bulls if the market does not even need to retest
daily 20EMA and 200SMA in order to bounce back hard to 2092-2100 region. We
think that would certainly create another large feedback loop for the squeeze
that capitulate more bears.
---
Our Swing
Options Account
- Took losses on the 30% shorts Dec SPY+QQQ puts
Total =
15% IWM Dec Calls remaining
Even
though we reduced the size of this swing short trade and took the majority of
the losses quickly a couple weeks ago. Then, used our day trading accounts
acting as a hedge with riding the intraday bull train on and off from 2030->
2100. This was still a terrible trade that we should have managed better.
To
reiterate: we are not great swing traders; this is a long learning process.
Our swing account represents only 20% of total trading dollars and the
day trading account represents the other 80%. For example, if the day trading
account is 800K USD, swing account is 200K USD. Follow our intraday commentary
only if you want to learn about great risk vs reward setups.
