Update:
Strategy: If VOLD ADD TICK are trending together at the open with risk favoring one side, Then I will trade that imbalance as a drive to a certain key level.
1. Are VOLD ADD TICK Trending together?
- Even if they are green or red that does not matter, the TREND is what matters most. If they are all together then ES is much more likely to have followthrough.
2. Are Sectors in confluence with the aforementioned trend?
3. Identify key levels for entries
1. 15m H/L
2. PDC, PM L/H, Yday H/L, OP, etc.
4. Enter and scalp to the next level
May 31, 2023
Rank: B
1. TA
- This was quite tricky to trust simply because we had made a higher high and were technically in an uptrend on the intraday. If you include premarket through that big spike up to previous days low was still just another lower high and we should expect continuation lower from that level after the big rejection. There was 1 last pullup to open price that was the perfect place to start to get entries into this trade. I was very close but hesitated strongly when the opportunity arose. Sadly, this trade wouldve given about 15 points cleanly had I gotten in and held for the move to LOD. It took us nearly an hour to break the 9ema so the momentum was very very strong.
- Depth and Sectors confirming downtrend thesis as well. Making this trade a B setup. Price action was still somewhat tricky with that large liquidity swipe above previous day low so I dont think this is an A setup but its pretty damn close to one.
May 16th, 2023
Rank: D
- When the sectors are not trending in the same direction its simple, dont trade it. D setups are not worth the effort. Its like playing J10 off in the small blind to a 3 bet. You will lose the more you play that hand. Maybe 1 time you get lucky but in the longrum the house wins.
1. Fundmentals
- JP is talking friday and we opened pretty weak with a bunch of different trends within the VOLD ADD TICK Sectors. It was an extremely difficult day to trade and I need to understand why there was no followthrough.
2. TA/Strategy
- Step 1 was completed when the ADD finally turned red. We have all confluencing trends when ADD breaks the LOD.
- Step 2 was NOT complete. If step 1 is trending lower then we want to see Risk off green and Risk on red. If risk is being put in the market then these trades have much less chance of followthrough. This was a D setup for that reason so I still took it with 1 contract.
- There was a 15m OR break down and retest which I entered on for the open imbalance trade lower.
3. Trade Review
Ideas: I shouldve avoided this trade altogether. If the sectors are doing the opposite of the depth then its just not a good idea to take the trade. In nearly all circumstances except maybe if we are outside of the previous days range, that is going to be a bad factor for this style of trading. If we want clean consistent followthrough then it must be immediate and there must be no question about where the money is flowing. If the money has time to flow into different sectors then the market will stay rotational and it will be very very difficult to trade it.
Execution: I only lost $6 here because I knew that the sectors doing the opposite was a clear outsized risk in the trade so I did not want to hold it long. We had a candle closure back inside the 15m OR so I just got out. Yes this was a loss but I think I handled it nicely in terms of execution. Now on another day when I stop out here and that is where it rips, then ill tell you how I feel.
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May 15th, 2023
Rank:
- I give this a B because we were trending in the right direction altogether but the WAL and PACW moves made it a lot harder to trust this to really go with no bids. Its arguable but this could possibly be a C in the future depending on how much I test it.
Other opps Examples of an Open Imbalance
1. Fundamentals
- At the open there was a much more negative sentiment than positive. We were moving lower in nearly all sectors off the open except for WAL and PACW being green as well as BAC and JPM. AAPL was moving lower as well as KRE NQ.
- Even the VOLD on ES and NQ was trending lower after the opening print price. The ADD was moving strongly lower TICK also trending down.
2. Strategy
- the 30m opening range did not work today but the 15m opening range did. If you played the 15m opening range instead of the 30m opening range then you wouldve had 2 extremely nice trades here. I think that when the price action is trending one way but the VOLD opens the opposite and so does TICK there is still a chance to get a nice short trade in while the trend still hasnt yet flipped to follow the VOLD. When things are trending in one direction in the first 15m and you are looking for continuation you need to pay attention to the 15m as a key level to risk from.
May 8th, 2023
Rank: B
1. Fundamentals
- Sometimes the SPY has to play "catch up" to the rest of the market. If there are early signs that risk is OFF in the market then the SPY may take some time to catch up to that sentiment since it has all 11 sectors in it. The QQQ is the biggest "tell" on this strategy simply from the fact that QQQ is the best risk on/off indicator in the market. Today SPY was flat at the open while the QQQ was breaking premarket low and the sectors are telling us risk was off, VOLD, ADD, TICK were flat/negative, DXY was breaking out, all are signalling that the SPY may fail. CPI is wednesday so continuation is very unlikely. I wanted to simpy play the imbalance in the SPY at the open for a break to the premarket low as my target. I will not hold this position for bigger gains than my predetermined level because again CPI is a catalyst that causes lack of continuation.
2. Technical analysis/Strategy
1d:2m (/ES)
- SPY dropped at open but not with as much strength as the rest of the market. There was an uptrend in premarket and we reversed at the open with a break of vwap and a pullup for a lower high entry point (red arrow)
1d:2m (/NQ)
- As you can see the QQQ broke premarket low very fast into the open and then moved decently below that level. The QQQ did this BEFORE the SPY. This is a major point in this strategy. The QQQ is a major sentiment indicator in the market. When large players want to take on risk they buy the Qs. If they are selling the Qs at open then most likely it will be a risk off move at least for the first 30 minutes.
Sectors:
- Clearly the sectors were in a major risk off move given that nearly every sector other than communication was dropping pretty heavily right at the open. Again this was happening BEFORE the SPY followed.
Depth:
- Finally, VOLD for QQQ and SPY were both somewhat green at the open but not strong because they were still below +3. The values started to decrease pretty fast right at the open. the ADD (my favorite "tell") was getting destroyed at the open. Again BEFORE the SPY, ADD broke LOD and started gapping to downside. TICK was neutral.
Strategy: Open Imbalance
1. QQQ breaking down
2. Sectors showing Risk off
3. Depth showing neutrality or declining into bearishness
4. SPY is creating a lower high after showing clear signs of a downtrend beginning to form
3. Trade Review
1d:2m (MES)
Trade Idea: A
- I had the right idea here for the SPY to catch up to the overall sentiment in the market via an imbalance. The QQQ was breaking down strong, VOLD decreasing on ES and NQ the TICK was neutral and the ADD was falling off a cliff. Sectors were weak and being sold into. I wanted to simply play a imbalance from the Qs to the SPY and it worked very well. I took my trade aggressively, didnt stop out early, and had the right idea on where to exit. I think this was a pretty decent trade especially given that I wasnt tied to the whole "gotta make 10 points today" scenario. I was just trying to play the chart infront of my eyes and I think my view on the market was pretty spot on for this specific trade.
Execution: A
- I also had really neat execution. Got in for the lower high , risked the previous lower high at 4156, Took my profits at the area most likely to bounce because I am aware that the SPY is the index that really moves the market. The QQQ is really not moving the entire market unless some type of breaking news catalyst occurs. If the SPY is the one really moving the market then this trade needs to be fast. Its really just an imbalance move where the SPY can easily just rip back up and take the Qs with it. I was aware of that and I traded it accordingly. I am happy with the execution.
Mindset: A
- I was aggressive yet patient. Got the clean entry, knew what my stop was and what my target was, and I held for one of those outcomes to occur with no care about which one it was.
