April 25th, 2024

Tug of War. Sometimes trends just aren’t clear. I know as traders we want things in black and white, but a lot of times markets are in the gray, where things are foggy and we have tug of wars. Right now, there is a fight in the market taking place where I see many macro traders and technical traders have different ideas about what’s next for this market.

There is really no consensus at the moment, and it’s causing weak-handed positions to cover and cause some whippy moves intraday. Algos love fishing for stops in this market, and those that are trying to size up in areas are likely getting clipped. Those that are being small can weather the whippy moves and stay in the trades they want to be in.

From my perspective right now, the bulls have to hold the market above this week’s lows by tomorrow, or else the selling could escalate in a big way. In the ES, NQ, and RTY, we have daily Bollinger Bands remaining wide open (which indicates range expansion), we’re at or below YTD VWAPs, we’re below the short-term moving averages that momentum traders look at, and rates are at highs of the year.

None of this is screaming bullish in the short term, but if you zoom out, the market’s in a very strong uptrend. This tug of war is going to continue for now, and with GOOG and MSFT earnings set to come out along with GDP and PCE data, the momentum can keep shifting on a dime.

The key right now is to slow things down. Have your levels plotted out, watch for reactions at those levels, and be small. Allow yourself the opportunity to stay in trades and let them work. If you’re too aggressive in this market, it will chew you up.

I will be live on Youtube this morning at 1030 ET trading Gold and will be assessing the days action in the major indexes. Here is the link to join in the livestream; https://www.youtube.com/live/IfyGI1mSVNw?si=3BYuYDnZ-Ik4nkjJ

Cheers, DELI