Citizen Free Press (CFP) has become a mainstay of my daily reading. It is a news aggregator like The Drudge Report, but Kane, the founder, has not gone off the rails like Matt Drudge has these past few years.
I grabbed the headline above from CFP last night. Naturally, it got my attention as I thought it was a story about the stock market. Of course, the story actually was about a bull escaping the slaughterhouse. But I thought the headline summed up my thoughts about the last few days. Funny how we filter the world from our own unique perspectives. ‘Where you sit depends on where you stand,’ as the saying goes.
Yesterday was another fabulous day. The volatility continues to be very conducive to day trading and somewhat rare. Yesterday’s epilogue will come out a bit later today. I am experimenting with a more detailed format. If you take the time to follow this detailed and daily analysis, you will learn how to day trade, at least the way I do it.
Today will be all about conquering the old high at 4384.50 (also the Weekly Expected Move High). Above that, there is nothing but blue sky until our former target at 4404, and then 4500. The 4500 level has top channel lines intersecting from all the way back to the beginning of the bull market in 2009. I don’t see how we get beyond that level, but I can argue up to that point.
Below us will be the Triple Day POC’s at 4369.75, the Overnight Low at 4367, yesterday’s RTH high (also the contract settlement) at 4363.25, and then yesterday’s Point of Control (POC) at 4359. Gap rules are in play this morning.
Overnight activity almost tested the all-time high. The gap is coming on some stacking bullish behavior, so the potential for early trade is there as to a fill or partial fill. As always, how much we get (if any) and how far down we get leaves M.G.I. (think: breadcrumbs) for us to know how strong or weak the market is. Obviously, action will depend a lot on how certain equities that are gapping will act early. Watch them as you would internals.
Also, note the ending diagonal on the hourly chart with 24-hour data. It points to the old high as the potential top of the two-day wave. That could portend a reset and some additional work to punch through the all-time high, at least today.
The true gap comes in the context of a market that has been one-sided since the recent lows with only small pullbacks, as evidenced by the two new VPOC’s in the last three RTH sessions. If today’s activity adds another, it goes into our narrative, and the market becomes even more susceptible to a liquidation break at some point.
Use the usual techniques (advanced traders only) on the gap. Look for early failure to break the ONH or a move above the ONH and then back into the overnight range as potential triggers for a fade. The low of the first one-minute low can be shorted, as can any retest of the open on an opening drive higher that fails.
Any stronger upside move has to take out the ONH and obviously has the ATH to contend with as well. Should that be the outcome, make sure internals confirm, gap-up stocks are rallying, and monitor for continuation as there is no longer technical reference above the ATH.
The Navigator Algorithm tripped a high trigger buy signal in the overnight Globex market. The signal would need to follow through today for the Founders Group to execute on it. The target is 4500. As always, I will let you know what we do, but the risks are incredibly high here. You cannot take this signal without studiously managing the trade.
Good luck today.
A.F. Thornton