October 24th, 2023
Even with yesterdays rally, the Bears still have the momentum. Yesterday, we experienced a rebound fueled by a Bill Ackman tweet where he mentioned covering his Long Bond Short position. This caused yields to drop across the curve. Ackman’s actions hold significant influence over market sentiment. When someone of his stature covers shorts in Bonds and suggests the potential for lower rates, equities take notice and rally. Bulls are currently waiting for favorable reasons to enter the market, as they have been scarce lately.
Today, we have Google and Microsoft earnings coming up, which are major market movers. Their performance after the closing bell will likely have a significant impact on the market’s trajectory towards the end of the year.
The daily charts for ES remain bearish, while NQ shows a slightly less bearish outlook. Yesterday’s rally didn’t bring about significant changes in the charts.
Today, my focus will once again be on the short-term charts. I’ll be watching the market open around the 4265-4261 range. If the 3-minute opening range surpasses this level and the VWAP (volume-weighted average price) holds above it, I’ll be looking for long positions and testing yesterday’s highs. However, I won’t be overly aggressive with my longs, opting for smaller positions that I can scale out of quickly.
On the other hand, if the 3-minute opening range fails to hold the 4265-4261 area and the VWAP drops below it, I’ll be on the lookout for short positions and a test of the 4251-4245 area. This range will be crucial for the day’s trading. A hold above this level may lead to sideways movement back towards the 4265 area. However, if it breaks, it opens the market up to retesting recent lows or potentially moving even lower.
Today, I’ll approach trading with caution and prudence. Just like yesterday, unless I see clear opportunities, I’ll once again stay on the sidelines. Earnings releases, headlines, and tweets that can sway the market are not my preferred trading times.