Trade Plan for 10/30 - 11/3
Trick or Treat!
Three weeks ago in the midst of feverish dip buying for what most believed would culminate in a Santa rally to all time highs after a weekly hammer candle, I sounded the alarm about why I could not be ‘unrepentantly bullish.’ I turned low confidence bear. The next week I increased my bearish confidence. Last week I increased my bearish confidence yet again. I am now sharing with you my technical list I published for members ahead of and during this large decline. This is the progression of the reasoning behind my bear metamorphosis:
I have been actively shorting pops for the last few weeks using my levels as a guide.💰💰 My noted concerns led to continued downside:
Three weeks ago I noted that although an $ES hammer candle is generally bullish, the wick was lower than the one from the week before. In other words it was a lower low and not a higher low. This is atypical from my examination of other bottoms. ✅ was not a bottom
While it hadn’t gone lower yet, $ES closed at the lows in the previous week and very close to the prior wick bottom which I noted generally leads to continued downside in the following candle. ✅ got continued downside
Both the previous $ES low and the higher low from before last week occurred outside of US hours. That’s not necessarily a gotcha, but it’s not my favorite kind of bottom. ✅ made new low in US hours
$NQ looked suspiciously like triplebottomnotabottom. Last week it looked like quadruplebottomnotabottom. ✅ notabottom as suspected
$RTY continues to look weak, BUT it did possibly pass the biggest loser baton to $NQ and needs to continue doing that for me to want to buy a dip. ✅ still doing it but in a ‘meh’ way - needs more ‘oomph’
The lows were not off of my weekly levels. ✅ last week we bounced just enough above one
I was lightly bearish on both precious metals and oil for the week last week. ✅✅
This week I outline the levels and new conditions I’m watching for either a bottom or the start of something much more ominous and @SLMacro takes a look at his past and future predictions.
Summary of Market Action Last Week:
The indices (once again) climbed into Tuesday before falling the remainder of the week in choppy intraday movement. $NQ/Nasdaq futures declined by the most followed by $RTY/small caps futures and $ES/SPX futures (This was a carbon copy of last week.)
$GDX/gold miners held relative strength to indices once again, but booked a loss on the week. The settlement below for gold does not include an impressive rally into the market close on Friday because of the way settlement works for futures.
$CL/Crude Oil futures declined on Monday and then chopped in range for the rest of the week. $XOP/oil equities lost ground against the indices.
Here’s how last week closed out:
For the week ahead (10/30-11/03/23)