Today's MARKET STATE for S&P 500: **NEUTRAL DIGESTION**
- The MKT is in a sideways digestive position with a slight positive bias.
- On the SELL side avoid DP BREAKOUT strategies but rather FADE a positive reaction against the DIR after a negative breakdown signal. UP and UT1 REVERSAL strategies are recommended over FADE strategies as "sloppy" trading conditions are expected. Any UP FADE trades should get confirmation first.
- On the BUY side UP BREAKOUT strategies are valid but should expect a laborious trade. Work any position, selling into emotional surges and re-entering on any sharp pullbacks. Expect a choppy trade and be aggressive on minimizing profit give-back. DP and DT1 FADE and REVERSAL strategies are recommended.
Today's PRICE MAP Performance for SP
Wrap Up
- Today in the S&P 500 futures market, there was an MC Value of +3 producing a positive tone in a NEUTRAL DIGESTION Market State. With such a positively skewed MC Value (+3), the market is prone to transitioning into a BULL TREND. In order to identify if this is happening, traders must use certain MARKET TACTICS to identify if the market is indeed going to follow through on a BREAKOUT above the UP, or if it is just producing an emotional "head fake". A Moving Average crossover system can help identify when a market is trending and serve as a "filter" for accepting BUY or SELL strategies. While trading above the R Level, the faster MA crosses above the slower MA around 7 am CT. This MA crossover tells traders that BUY strategies are valid. Our second "tell" is that the market produced a STRONG BAR breakout through the UP. These powerful bars serve as confirmation of the strength of the market move. This confluence of MA crossover and STRONG BAR signals provided us with the confidence to accept the BUY UP BREAKOUT strategy and ride the market all the way up to our UT1.
Today's MARKET STATE for AUSTRALIAN DOLLAR: **BEAR TREND**
- Technically the MKT is vulnerable to the offer. On the SELL side accept all BREAKOUT, FADE and REVERSAL signals. The MKT is on edge and any negative signal, especially below the previous session high, is an opportunity. Anticipate a price "zone" around a major resistance point to FADE. Have a plan and be ready. If your stop gets hit and the MKT does not immediately follow through, consider re-entering, even doubling up if there is structure to define low risk.
- On the BUY side REVERSAL strategies can be executed off of major support levels but preferably after an emotional sell off. This is an aggressive strategy and any profits should be realized at the previous support failure points. Avoid DP FADE BUYS even with confirmation, as this is more likely a plateau for a BREAKOUT SELL strategy. UP BREAKOUT strategies are not recommended but do have a better chance of succeeding than a DP FADE.
Today's PRICE MAP Performance for DA
Wrap Up
- With an MC Value of -5 and a BEAR TREND Market State, the expectation for the session is for a follow through in the BEAR TREND signal below the R Level. The market respected the R Level on two separate occasions during the overnight session before starting to sell-off gradually. Notice too, the 26 period SMA has crossed from above to below the 50 period SMA, signaling traders to look to accept SELL signals. At 6:30 am CT, the market produces a SELL DP BREAKOUT strategy, in line with our Sentiment Bias as well as our Moving Average crossover tactic. After falling through the DP, the market rallies and tries to trade back within the Critical Range with no success. The market begins to sells off, stabilizing at the minor level 1.0301, before moving down to the DT1 and eventually the second minor level at 1.0271.
Today's MARKET STATE for DOW FUTURES: **BULL TREND**
- The MKT has a firm tone and as long as the integrity of the previous session low remains intact, look for excuses to get long. On the SELL side UP FADE strategies are valid but profit targets and risk management should be tight. REVERSAL strategies should be applied only at the UP and +c after an exhaustive signal. Use DP BREAKOUT strategies as a signal to FADE a positive reaction against the DIR. Only until the MKT breaks the positive structure are sell signals an opportunity.
- On the BUY side BREAKOUT, FADE and REVERSAL are recommended as the MKT is bid and all buy signals are valid opportunity. If stopped out at or near the low tic of a reaction and the MKT is not following through to the downside, look to re-enter using the recent squeeze low as a stop. If the MKT breaks structure, de-leverage and be more selective as the likelihood of a sideways trade is high.
Today's PRICE MAP Performance for YM
Wrap Up
- Today the R Level proved to be the key inflection point in the DOW FUTURES market. In a BULL TREND market state, our expectation is that any corrective sell off above the R Level is an opportunity to get long the market. The market sold off sharply in the overnight session and allowed traders to get long the market from the R Level with a BUY R FADE strategy at 5:30 am. The market rallied back into our Critical Range and eventually made it up to our DIR at 10 am, allowing traders to trade profits on the trade.
Today's MARKET STATE for S&P 500: **BULL TREND**
- The MKT has just produced a big positive technical signal. On the SELL side DP BREAKOUT strategies are a low probability but valid. Risk little and go for a lot. If the MKT is going to turn sour, it should be quick and relentless. Avoid UP FADE strategies as the MKT has just produced a major buy signal and fresh gains are expected. UP REVERSAL strategies as well are not recommended, as any resistance level violation that cannot be held is more likely a squeeze for the longs, which can quickly turn positive.
- On the BUY side BREAKOUT, FADE and REVERSAL are recommended as the MKT is aggressively bid and all buy signals are valid opportunity. If stopped out at or near the low tic of a reaction and the MKT is not following through to the downside, leverage up using the squeeze low as a stop, expecting a quick reaction back above your original entry. De-leverage unless you have confluence with other indicators or like MKTs.
Today's PRICE MAP Performance for SP
Wrap Up
- Defining the technical state of the market along with which TACTICS work best in that state is an essential element of trading, and one that we will be taking a deeper look at in the coming weeks. Knowing what the market is expected to do is very important; however, knowing what the market should NOT do is of equal significance. Today's action in the S&P 500 highlights how to use our optimal HEDGE tactics after the market has produced a "tell". In a BULL TREND market state, our expectation is for the market to make higher highs and higher lows throughout the day, maintaining POSITIVE STRUCTURE. A break in this structure could signal that more of a DIGESTIVE market action is to be anticipated. As highlighted by the red circles, the market broke + structure just before 9 am CT when it produced a LOWER move LOW. This was our "tell" on the market. As the S&P 500 rallied back up to the UP, it gave us a very brief "headfake" above out RESISTANCE level at the UP, before reversing back inside our CRITICAL RANGE. After a break in the positive structure, this SELL UP REVERSAL strategy serves as a valid HEDGE opportunity. As the day progressed, this trade proved to be profitable as the market sold off to the DIR around 10:30 where profits could have been realized on our HEDGE trade.
Today's MARKET STATE for DOW FUTURES: **BULL TREND**
- The MKT has a firm tone and as long as the integrity of the previous session low remains intact, look for excuses to get long. On the SELL side UP FADE strategies are valid but profit targets and risk management should be tight. REVERSAL strategies should be applied only at the UP and +c after an exhaustive signal. Use DP BREAKOUT strategies as a signal to FADE a positive reaction against the DIR. Only until the MKT breaks the positive structure are sell signals an opportunity.
- On the BUY side BREAKOUT, FADE and REVERSAL are recommended as the MKT is bid and all buy signals are valid opportunity. If stopped out at or near the low tic of a reaction and the MKT is not following through to the downside, look to re-enter using the recent squeeze low as a stop. If the MKT breaks structure, de-leverage and be more selective as the likelihood of a sideways trade is high.
Today's PRICE MAP Performance for YM
Wrap Up
- In a BULL TREND Market State, our expectation is for a continuation of the underlying positive trend and the opportunity lies on the long side of the market. By the analyst placing the R Level at the DP, the positive sentiment is confirmed and traders should look to accept BUY signals above the R Level. In a TRENDING state like we had today in the DOW FUTURES, Moving Average crossover signals can be very helpful as they may provide a "tell" for the markets future action. As you can see, the faster 26-period SMA crossed above the slower 50-period SMA around 8 am, telling traders to accept BUY strategies. Shortly after, the market broke out of the Critical Range with a BUY DP BREAKOUT strategy. Also, in TRENDING market state, the market should build POSITIVE STRUCTURE by making higher move highs and higher move lows. As highlighted by the blue circles, the market stayed true to form today and made new highs and higher lows throughout the session. Around 2:30 pm the faster MA crossed below the slower MA, followed shortly there after by a break in the positive structure, signaling traders to flatten out their long positions.
Today's MARKET STATE for GOLD: **NEUTRAL DIGESTION TRANSITION**
- MKT sentiment is leaning negative and will outweigh the buy side if the integrity of the previous session high remains intact.
- On the SELL side accept BREAKOUT, FADE and REVERSAL strategies with the expectation that the current negative transition will continue. Keep aggressive position management on DP BREAKOUT strategies as the MKT is still in the neutral zone and has yet to commit to a new trend. A more conservative strategy would be to wait for positive reactions after a negative signal to FADE the DIR.
- On the BUY side avoid DP FADE strategies until after the previous session high point has been taken out. Until then, a better opportunity will be a DP REVERSAL strategy. The idea is that the transition trade is over and a positive shift back into a NEUTRAL DIGESTION is expected. UP BREAKOUT strategies can be profitable but they are aggressive. Risk less, go for more
Today's PRICE MAP Performance for GC
Wrap Up
- With a NEUTRAL DIGESTION TRANSITION Market State, the GOLD futures market is in a Neutral Primary state; however, the market is "in play" and today's session may be the start of a new move. The R Level is above the market at the UP signaling traders to accept SELL strategies. The market building negative structure throughout the morning session serves as our first "tell". Around 6 am, the market gives us a SELL DP BREAKOUT strategy that is in line with out sentiment bias. In these NON-TRENDING market states, it is critical to look at momentum oscillators for "clues" during the session. The indicator that I have included is the 14-period RSI. The red circles represent NEGATIVE REVERSALS in the RSI indicator. In essence, the market is "more oversold" at LOWER price levels, representing weakness and thus, confirming out short position.
Today's MARKET STATE for 5YR TREASURY NOTES: **NEUTRAL DIGESTION**
- Technically the MKT is "on the fence" with the potential to go in either direction or nowhere. Pick your points and have no expectations, as the likelihood of this MKT trading sideways is high.
- On the SELL side BREAKOUT, FADE and REVERSAL strategies are valid, however profit and position risk management should be aggressive and anticipated. The pivotal nature of the session does have the potential to be the starting point for a new move. However, the probability of any trend action is more likely to just be the MKT defining its new consolidation extreme.
- On the BUY side BREAKOUT, FADE and REVERSAL strategies are valid, however profit and position risk management should be aggressive and anticipated. The MKT is "on the fence" and does have the potential to be the beginning of a new trend move. The probability of a new trend move is low. However, any price trend action is more likely to just be the MKT defining its new consolidation extremes.
Today's PRICE MAP Performance for FV
Wrap Up
- Today the 5YR TREASURY NOTES was in a NEUTRAL DIGESTION Market State. By identifying the primary technical state of the market, we know that our expectations for the session is for a sideways, choppy trade within the CRITICAL RANGE. The R Level at the UP identifies the optimal entry point for the session and informs traders that the opportunity is to the downside as long as the market is trading below this level. In a non-trending market state, traders should look to key in on momentum oscillators to identify trading opportunity. The 14-period RSI on the bottom of the chart highlights a divergence in the oscillator that occurs AT our KEY INFLECTION POINT. The market approaches the R Level for a second time; however, this time the oscillator fails to confirm the move by putting in a LOWER top. This tactic illustrates weakness and gives us our "tell" to accept the SELL UP FADE strategy. As it played out, the market respected our level at the R Level and sold off sharply from 7am - 9am. Since our expectation is for price action to stay within the Critical Range, profits could have been realized on this trade at the DP just before 9am.
