Navigator™ Swing Strategy – Buy on Dips to the 5-Day Line / Navigator™ Day Trading Strategy – Bias is Long – Looking for a Partial Gap Fill.
When you’re hot, you’re hot. And that is where we found the bull market this morning. We will gap higher, approaching new, all-time highs. Can you believe it? Not sure if I do.
The CPI came in at 6.8%, the highest in 39 years. Go figure. Is the market rallying because it could have been worse? So because the number met expectations, we have a relief rally? Maybe new all-time highs?
Maybe it is because we tagged the 5-day line in the middle of the night? We slept through another entry! I am going back to Europe to handle those hours better than the Pacific Time Zone.
But then there is the futures contract roll today before next week’s quarterly expiration. Weird things happen around the rolls from time to time.
Nothing makes sense when nothing makes sense. Do you see why I don’t like day trading on Fridays?
Swing Traders
Maybe we don’t get our 5-day line entry, as it came overnight again. We may have to go with a breakout. But I will let you know either way. I certainly did not expect a rally, much less a gap open, on the heels of the worst inflation numbers since riding in my horse and buggy carriage to college.
Interest rates were 18% then. This market is, in a word, crazy. Short covering, maybe? Maybe the market will be in the red by the close. Perhaps this is a dream, and I will go back to bed.
Maybe, just maybe, we are starting that blow-off top? But nothing has changed from yesterday, as we all sober up this morning. Five stocks carry the entire market. Either they will pull the rest of the market higher, or the weary soldiers will pull the generals down with them. Your guess is as good as mine.
Day Traders
Although gap rules and balance rules are in play, the market deals with old business first, focusing first on the gap rules. Overnight inventory is 100% net long, and we are opening out of yesterday’s range and in the upper third.
Note that we are only outside yesterday’s regular session range but not out of the larger balance area of the past three days framed by 4705 and 4655.25 (using the new ESH22 March 2022 contract numbers). Watch to see if the early fade happens or not.
Given the three equal VAH’s around 4685, there could be a test of them that would provide support (and a potential long entry) before moving higher. Finding acceptance back within value would be less bullish. No gap-fill would be bullish as it gets.
Only acceptance below yesterday’s RTH Low (low of balance area at 4655.25) can change the tone. Barring that, assume pullbacks are buyable.
As my mind floats back to those old inflation days, “This is the craziest party that could ever be. Don’t turn on the lights ’cause I don’t wanna see. Mama told me not to come….” Three Dog Night.
A.F. Thornton