January 2, 2023

Does the first day of the Trading Year set the tone for the year? It definitely could because performance for any market is based on the close of the last day of the year. How the first day of the year goes sets an important tone for the initial flows in a market. The first day of the year is probably the most important trading day of the year for me when it comes to the technicals. I watch the range of the first day and how it relates to the VWAP (Volume-Weighted Average Price) for the rest of the year. Trading above or below today’s range and VWAP are very important for directional moves going forward.

My plan for today:

ES: The last day of the year had a selloff that has now triggered a swing short trade setup on my daily chart. The selloff in ES brought the daily Bollinger Bands pointing inward. Now, my Beacon Indicator, which is free for anyone to use, indicates a target of 4689.50. This doesn’t guarantee that we will reach that target, but it does mean that my daily strategy tells me to be a short seller intra-day until I see a daily close above 4820 or above the 5-day moving average or VWAP anchored to today. So, for now, I will sell the rallies using my 3-minute opening range strategy with VWAP and standard deviation lines.

It’s important to note that we’re seeing the same setup in NQ, RTY, and the ZN (10 YR Futures). The fact that all of these markets are showing a sell signal indicates that this move shouldn’t be faded. With rates inching higher and all major indexes giving me a short signal, it’s a sell the rally market until I see something change.

Start the year small and smart. If you get stuck early and the day isn’t working out for you, just step away. I’ve started years down in the past and felt the need to chase early on, but that is the absolute last thing you want. Keep your losses small and think big picture.

Cheers, DELI