March 27th, 2024

The channeling bull market. Many traders haven’t experienced a bull market like this, where we just grind sideways to higher, and volatility is just sucked out of the market. In my 25 years as a day trader, I have seen a few environments like this, and they are the ones that typically start to weed out a lot of traders. Expectations start to get in their heads. They start to think too much. They start to trade too much, and eventually, the market bites them because they push too hard in a market that can’t be pushed.

This is when you have to realize that small wins or small losses are your new reality (for now). When people talk about managing risk, it’s not just about managing it from one trade to the next; it’s about overall taking risk down or up in certain market conditions. Right now, I have taken my risk down substantially, which lowers my expectations and allows me to trade small and be content with small wins or losses.

Now if your strategy is doing well in this environment, then you should be managing risk accordingly. Just because it’s slow for me or many others, doesn’t mean that you can’t excel in this environment.

My thoughts for trading this market today are the same as they’ve been in my note the past week. Rangebound market and trade the edges, avoid the middle. I favor the long side because the primary trend is higher, but I think the market rotates off resistance in this tape so shorts can be taken as well.

RTY 2129-2092 (Bounced off the low end of the range three days in a row)
ES 5321-5279 (Watch 5300 as a pivotal level; it’s called resistance using MenthorQ GEX Levels)
NQ 18,622-18,386

If we break out of these ranges, extended moves in either direction could occur. Keeping it simple and trading small and smart is key.

On a side note, watch for notifications later in Futures Radio as I post my latest podcast with Jimmy Jude and Andy Constan. We discuss this low vol environment and how they are trading it.

Cheers, DELI