Today was quite uneventful. There was a lot of conflicting information that led the market to pretty much be untradeable unless you enjoy super tight choppy price action.
New Playbook
Futures Imbalance (M2K)
1. TA/Fundamental
- A Futures Imbalance occurs when all futures symbols are moving in a general direction and one symbol is lagging behind. A fast scalp can be taken as a sort of "reversion" style trade.
- As you can see every single futures symbol had a big selloff before the open and the only one that waited until the last minute to do so was the Russel. It spiked up through the highs and then held those highs before ripping lower through its support. Something important about this trade is the fact that the russel was not declining for quite a long time while ES and NQ were in clean downtrends. It was lagging by almost a full hour in relation to ES and NQ, which are its most closely related tickers in comparison to the DOW.
2. Review
Execution: Not good, I chased the low and then covered at the top. I need to learn the personalities of these tickers before I start to size into them heavily but this was a typical case of the "i never traded this shit before" becuase the Russel broke out to a new high before ripping lower which if you look at my review from yesterday, is the exact same thing that happened but to the short side. Its a very fakeout heavy symbol and if I can learn that and identify when NQ and ES are moving and RTY is lagging behind then I can wait for that fake breakout and then the big move lower. I couldve easily taken this trade at the breakout high, added into the breakdown, added one more time on the break of support, then sold for about 7-9 points right before the open. That should have been a much better trade but I just executed it poorly. I need to really give this ticker room but I will adjust that for the future.
Idea: Beautiful idea to get short because it was lagging behind but lacking patience really screwed me over.
MES analysis
- We hit the mid channel on 4h back to the upside so momentum should in theory continue upwards until we hit pure resistance
- Descending channel on the 30m and we broke out to the upside but there was no followthrough, probably because Q2 end tomorrow. Also above the anchored vwap from peak.
- Ascending channel on the 2m and we bounced hard off the bottomside of that ascending channel, confirming that the 4h trend should continue at least until we hit the mid range of the 2m uptrending channel.
- Weight (left 2) was at the top of the descending channel as well as at the top of the 2m descending channel.
- Futures (right 2) were very interesting looking. 30m there was a descending channel that we broek out of and pulled back and used it as support to continue. On the 2m we really just ranged in a large ascending channel all day which makes sense given that Q2E is tomorrow.
- The middle chart has the price action of all tickers from open and you can easily see that the NQ was the weakest out of all 4 futures symbols. The RTY held up nearly all day with no big moves lower though.
- If you think about the directional obscurity of these charts, this is exactly why I did not want to trade a lot today. Weight is clearly going down and the Futures are clearly trying to break out. They can not breakout when 70% of the money in the ES is located on 7 big tickers and they are all going lower.
- Tons of conflicting signals here. NQ downtrend, RTY clean breakout and uptrend, YM big uptrend, meanwhile ES is still just very weakly trying to breakout of its 30m descending channel. Its all very conflicting.
- VOLD was green as expected given all futures symbols were trying to breakout of their combined ticker 30m descending channel and were riding up the 2m ascending channel. ADD was ripping off the open but this is why the ADD is kinda shit lately. It seemed like for a long time the ADD was actually a great indicator for immediate price action and I am sure it will be in the future some day as well but recently the combo ticker I call Weight which is just the added up symbols of MSFT AAPL TSLA GOOG AMZN NFLX META NVDA, seems like the better indicator for the direction of the ES and NQ. When the ADD is ripping up and the Weight is moving lower, guess what? that means we are in a rotational environment. No directional moves will occur when the big money is buying one asset class and selling another at the same pace as all of the other big money participants. The ADD going up, Weight going down, NQ going down, ES going sideways/up, RTY going up, YM going up, NQ being the laggard, VOLD basically being neutral, and Combo Futures ticker is breaking out of a huge descending channel and is uptrending on the 2m, that is all a lot of very very conflicting information that leads me to believe that the market will be directionless and in that case I want to remove myself from the situation as quickly as possible with timed tasks so that I can come back about every 30-45 minutes to check the market to see if things started to align again. I think what I did today was lose the minimum after kinda fucking up a tricky trade on the elusive RTY but only losing $15 on a day like today seems like a huge win given I would normally fight this day until it took a good chunk of my account.
- RVOL across the board was super super weak and risk on was red meanwhile the combo futures ticker was breaking out of a huge channel. Ugly ugly ugly. This is all the OPPOSITE of what you would want to see on a clean day.
