As noted the “surprise” rise of crude against seemingly bearish (for crude) news has put a damper at least temporarily on stock markets.
YM – Dow 30 Futures Intraday
IF prices push back above the 10545 range I’ll be looking to establish new longs – the likely scenario will be a retest of the day’s high and buying the first retracement above the day’s high.
At this point I’m short YM just a few points off the high of day and plan to hold that position with a break even stop while this chop plays out. Yet I am holding new longs (QQQQ, QLTI and others) from yesterday, also with stops at break even.
Rather than jump to conclusions as to whether this rally is over or not, my approach is to let the market decide for me – as we always should. In this case if the intraday support at the current low of day fails, my new short will work famously and eventually my new longs will stop out, and we’ll have a new, down, direction to lean into. And if not, the longs will win and with a little luck the rally will extend for several days at least, rising into all the overhead resistance which has built up over the past couple of weeks where we will then again be faced with selling decisions.
CLK5 – Crude futures
We see here that price made an impressive reversal yesterday following the EIA report – ironically, stock markets also made an impressive reversal the day before. The nature of today’s stock market is that both crude and stocks do not rise in tandem for long before the traditional inverse relationship shows up one again – so one “tell” for us is watch how price handles the gaps below and above price here on the Crude contract.
As noted in today’s Crude Realities, crude has now formed a classic range and found support above the $53 level. It may just be that crude has a support level far higher than the common expectations on the street…
Today’s Strategy
For the balance of today we can expect much grinding away of price while the market decides whether the big pop in crude oil today is a one-day affair or not. I’m going to keep my box-the-market trades going as long as possible, with break even stops on YM and QQQQ. I will also continue to take long-side trades on stock specific setups as long as they make sense, until such time as a bona fide breakdown of the broad markets is evident.
05.03.31 11:16 #