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This newsletter represents my own personal thoughts and actions/intended actions, subject to change without notice. I am not a licensed financial professional. Do not mis-interpret my observations or actions as recommendations. Be responsible and always exercise proper risk management in your trading.
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Weekly Recap:
Hello everyone! While volatility remained elevated to an extent, this week’s action can be considered somewhat ‘rangebound’. Both sides, buyers and sellers, had moments of control but neither found any sustained momentum. This falls into the category of corrective action, as markets digest and prepare for the next move(s).
When price action shifts from high volatility (such as the aggressive downtrend from a few weeks ago) into the comparatively rangebound action we saw this week, it can be hard to adjust back to patience/selectivity. However, these situations are the ones that call for the most discipline… I’m not saying there won’t be any opportunity, but it’s important not to get “stuck” on high opportunity mode.
For example – if an average week produces 5 trades for you, and you get a couple high opportunity weeks where 15 trades are provided, it can sometimes feel impossible to be patient when things go back to ‘normal’. The ‘normal’ conditions can feel unbearably slow in comparison.
It’s crucial to remember that there will be times of high opportunity and times of average or even low opportunity, and this may look different for each of us… But WE get to decide when/where we participate in action. There is no quota, no minimum or maximum amount of trades we should be taking. Our participation, quite simply, should come down to one question: “does this situation provide me an advantage within my system?”.
HTF Context:
This pullback from the December highs may still represent the w-ii of (V) on the higher timeframes. While buyers haven’t stepped in just yet, this thesis remains in play. Bulls will need to hold 18.3k/5300 to keep it this way… Otherwise, the weekly/monthly uptrend will be broken and imply a higher degree pullback, likely to at least get through the April lows.
Mid Term Outlook:
From the December highs, there is a strong case for flat corrections down on both $ES and $NQ (highlighted in blue). Throughout the week we discussed the structure/character of the recent bounce, and my view remains that the w-ii low is likely not in just yet. Rather, that this bounce is the ((X))-wave, with one more low via ((Y)) to follow… After said low, I will be looking for bulls to step in and begin the reversal back through ATHs. Of course, holding the 0.786 fibs will be necessary to keep these counts as high probability.
Short Term Outlook:
A large part of why I view this bounce as an ((X))-wave is that the move began with flat corrections to the upside (highlighted in orange). This was not an impulsive reversal, and the character of the action since then has remained overlapping and far from the driving/aggressive nature of a ‘typical’ impulsive move.
Is it impossible for the low to be in? No. But as of now, I don’t have enough evidence to declare a clear bullish takeover… So, while I am open to a bit more short term upside within this bounce, I will still be looking for that final ((Y))-wave down to follow.
Friday’s bear trap played out, but with a very ugly/messy initial structure. Given that this is part of a corrective bounce, the action could remain a bit messy in the short term. Friday’s low could hold with a 3-3-5 forming for (y), or one more quick sweep of Friday’s low would also be acceptable as long as buyers followed with a fresh reversal… One way or another I am looking for last week’s high to be reached within the ((X))-wave bounce
Individual Stocks & Products:
$MU has spent over 6 months consolidating now in what I am tracking as a triangle ((X))-wave. If provided, a sweep into the 70s could finalize this WXY correction. From there I will be on watch for a bullish reversal. I am not looking to get involved on the short side, I am just waiting for the long opportunity if it is provided.
$GOOG remains highly interesting to me with a large running flat potentially in the final stages. Similar to the indices, another poke lower would be ideal, but I will be on watch for a reversal to follow from there.
In line with the theme of today’s update, $NVDA falls into the category of “one more low” as well… I am tracking a WXY correction, looking for one final low before completing. I will be on high alert for a bullish reversal to follow.