Navigator™ Signals for Day Traders by 0 Comment I feel like I am living in three different worlds at the moment. First, there is the NASDAQ 100, growth stock, and tech world where all seems well. Then there are nine out of the 11 S&P 500 sectors that have been correcting for a month. Finally, there is the S&P 500 index itself trying to ride the fence.Was yesterday a “key reversal?” Did one Fed Governor’s comments Friday send the market reeling, only to recover yesterday on seemingly opposing comments from a different Fed governor? Did the publication of Fed Chairman Powell’s proposed Congressional testimony overnight help preserve yesterday’s gains? Was Friday just another one-off bounce to the 50-day line and back? When I look across the correcting sectors, I would argue for yesterday’s action to be a dead cat bounce. Those are the bounces that suck amateurs back into the market while the professionals sell their inventory to them and then pound the market down. Of course, nothing is ever quite that simple.In the chart above, the most optimistic scenario is that we just keep going today and challenge the old highs on the S&P 500. The middle ground is that we continue to form the reversal pattern mentioned yesterday and outlined on the hourly chart above. The pessimistic scenario is that we retraced a little more than half the sell-off and we continue down to new lows.The Founders Group took a small, unofficial short position at 4215 on the index yesterday. Unofficial means that this is not a formal, announced Navigator trade. We are simply sharing our thinking out loud. Sometimes, you want to nibble at establishing a short position when the index is ripping higher as the premium is rich enough to give you an extra boost. The initial stop was the old high, but now we have lowered that to a close above the Navigator trigger line. The trigger line is dynamic, currently 4225 at this writing. As far as we are concerned, this was a low-risk entry point for a short (if nothing else) with a reasonable stop.If my conviction was high, I would be more aggressive, but the jury is still out a bit on whether the NASDAQ 100 and growth will pull us out of the broad market, stealth correction. Or, alternatively, will the broad market eventually pull the narrow growth=style group down to new lows. Let’s just see what happens and let price guide us. 24-Hour S&P 500 Index Futures - Volume / Market Profiles Today’s Plan The size of yesterday’s reversal was a bit of a surprise to the bears, leading to poor structure in the distribution range, which was roughly 60% single prints. These singles are caused by panic short-covering. Today’s session will be all about whether or not these higher prices are accepted or not. As of now, they have been accepted in the overnight session – but see the discussion above. Continue to carry the single prints forward until they are tested. Holding above them is bullish and nips the odds of heading lower. Testing them increases those odds. I will be watching how the market handles the overnight high at 4226.25, settlement (also the value area high at 4219), and 4202 which is the top of the single prints. It’s common after an expansion of range to balance a bit which is what we could have in today’s session. As of now, overnight activity is already doing so and the regular sessions often follow the tone of the overnight. If so, assume responsive trade. As mentioned above, only acceptance below the top of the single prints brings potential for change.
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