Indecisive action continues
Friday’s session was similar to Thursday’s action; at the
open of the day session the market rolled over and on both occasions the bulls
managed to sticksave at the price channel support level. In practical trading
terms, we had a great risk 3 points for 10 short at the open and the first
hourly bar closed as a large bear engulf – which suggested more downside is
likely ahead. Subsequently, similar to Thursday’s price action, the bears
quickly failed to keep their momentum going by letting the bulls retrace more
than 50% of the prior bar. By 11AM, the hourly candle closed as a large bottom
wick and gave us a large intraday range high and low. By then, we knew that
there’s a high possibility it was going to be a range bound day since it had a
large hourly bearish engulfing that “should not” had retraced by a bottom wick
bull bar sticksave. Therefore, the intraday bears had failed once again just
like on Thursday and it even failed to reach the first intraday bear target of
2075 by forming LOD at 2077.50.
Overall, the market started to consolidate since Tuesday Nov
2, when it hit the major resistance confluence red trend line. Then, on Wednesday
the daily closed as a spinning top candle followed by two consecutive doji
candles. However, after all that’s said and done, the market still closed above
the trending daily 8EMA bull train support.
What’s next?
Daily closed at 2093.50, this is the 11th
consecutive close above the daily 200SMA and it was a doji just like Thursday.
Market is still consolidating in a tight range above the daily 8EMA and waiting
for the next breakout to occur.
Remember, this is a
bull train until price proves otherwise. We’ve been mentioning this for
weeks now, but price is king and everything else is just noise.
As long as price
remains above the daily 8EMA 2086, the immediate targets are still 2100, 2120
and 2134.
For short term bears:
breaks below 2086, then immediate targets are 2077, 2065, and 2057.
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The Daily Extreme
Overbought Signal
Still in extremely overbought region, but price needs to
breakdown in order to confirm the sell setup for the swing timeframe. The
possibility of a fast and furious breakdown is still there. As mentioned
previously, price is king and the signals are just setup potentials to keep in
mind. At this point, price needs to decisively go under 2070 first for bears to
even begin their aggressive swing short.
Roadmap and thoughts:
Price has now closed above the 78.6% fibonacci retracement
level. Currently, this leads us to believe that the 100% full retracement at
2134 becomes very likely and will eventually be fulfilled. The key issue with
this is that we cannot predict if it does this within 20 sessions, or get a dip
back to 2030 first then go for 2134, or it ultimately fails. This is just a
very general roadmap/thought to be kept in the back of our minds. Remember, the KISS series focuses on high probability
immediate targets with our approach of the market level by level, hence the
high win rate.
The first try at Daily 20EMA is a BTFD setup
Even if bears manage to reverse next week or within these two weeks;
daily bulls may have a first try BTFD setup at the daily 20EMA setup. We count
this rally from the 1861 vs 1861.5 hourly bottom to 2010 as Leg 1. The bounce
has never had to retest the daily 20EMA yet, but retested the daily 8EMA 4 times
and bounced off it. This means it has been a massive bull squeeze run that the
very first dip to 20EMA should sticksave. However, just because first try BTFD at
daily 20EMA is a great setup, it does not mean it has to be a daily chart scale
bounce (50-100 points). It could just be an intraday 20-30 points bounce then
retest the daily 20EMA again if bears manage to have that much conviction.
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Our Swing Position
- Added 10% Dec Monthly IWM Calls (buystop executed near end of Friday’s session)
Total = 30% Dec Puts (SPY+QQQ) and 30% IWM Dec Calls
We will upgrade the IWM target to 123.50 if it can decisively
close strong above our first target at 120-121 first. IWM Daily 200SMA = 120.82
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 great risk vs reward setups.
