Yesterday was a tricky day to navigate. I like these days of chop, but I know it’s not the case for everyone. This should be a fairly quick one today as yesterday didn’t change much to the picture. Why?
We’ll go through some levels from yesterday as well as my plan for the day.
Before we start, if you’re looking to improve your trading, I offer 1-on1 call to go through:
Strategy review;
Help with implementing a robust trading framework;
How to backtest;
Trade review.
The goal is to have a professional, repeatable process where you can measure each step you take to see if it gets you closer to your desired goals. I have no real idea of what’s fair pricing, so you’ll probably see me adjust it a bit over the next few days.
Shill corner
2 days left, limited 90% APEX PROMO - Great time to buy a couple of $50k evals for less than $30 (you can buy up to 20).
What happened yesterday?
Not a lot. We had a perfect reaction to the orange level I shared with you yesterday. I also shared some live trades on my Twitter feed, which is something new I enjoy doing.
We had 140+ pts reaction from the level shared in advance and a 100 pts drop from 438. Not too bad for a Monday.
The interesting thing from yesterday is AAPL 0.00%↑ down almost 10% from the highs, with its daily RSI below 30 (!). Quite an interesting setup considering how ‘high’ the price is.
The VIX is showing some signs of life with a peak above 17 (red line). Do you notice that it’s easier to trade both long/shorts when we have the VIX higher? I personally can’t wait for the VIX back above 18/20.
If you look more in detail at yesterday’s action, you’ll see that there were many ways to get f****ed. What’s the solution? Extreme accuracy and patience. I don’t see any other way to make it through August, with a VIX still below 17.
For me, it’s a great time to spend more time outside, develop side businesses, and of course, do some programming.
The overnight action is down only (so far), as we dropped 100 points in a straight line. Something really important I discussed recently, yesterday’s action doesn’t rhythm with tomorrow’s action. Last Friday afternoon was crazy bearish. Yesterday, after the European close, it was impossible to have a drop greater than 30pts. Today? We’re down 100 pts already. This market is bipolar. That’s why it’s even more important to treat it one trade at a time, with no bias carried from the previous days.
With the volatility contraction yesterday, the best setup (for me) are breakout setups on the higher timeframe. Since the higher timeframe is trending up, I’d favor the long-only (either failed breakout of the prior day's low or long of the prior day’s high). However, I never chase price, so you’ll never see me buy the breakout of the prior day’s high.
I have no additional level for today, the key is to observe what happens in real time and react to this information.
I’ll probably share a thread on Twitter on August PA today/tomorrow if I’m not too lazy.
Be safe, don’t overtrade & build a repeatable process.
I hope what I share helps you in your journey.
Shill corner
2 days left, limited 90% APEX PROMO - Great time to buy a couple of $50k evals for less than $30 (you can buy up to 20).
Cheers,
— RC