November 7th, 2023

The bull’s momentum has stalled. Momentum is crucial in these markets. When it stalls, it can quickly reverse. But when it maintains momentum, it can exceed our expectations. Currently, the bulls have lost momentum. They need to reclaim it today, or else we might see a drift back down. This has been a recurring theme for months. The bulls gain momentum, find support at a low point, and then the rally falters, leading to new lows. Only time will reveal what’s next for the indexes.

In the meantime, I lean bullish based on the technicals. We are above the 5-day moving averages, which are sloping higher. Additionally, we’re sitting above key AVWAPs.

Key levels to watch today: In the ES, we are boxed in between 4366-4404. 4366 acts as support, while 4404 is resistance. As long as we stay within this range, I am a buyer, relying on 4366 with hopes of a rally up to 4404. However, if we fail to hold 4366, we could see a decline towards 4310, with a possible stall at the 5-day moving average at 4328. On the other hand, if we manage to close above 4404 for the day, I expect the momentum to shift to the buy side, potentially propelling us towards 4550 in the coming sessions.

In the NQ, the outlook is more bullish compared to the ES. The range of 15130-150080 is my bullish zone, and it’s holding steady above it. Currently, I’m more inclined to be long on NQ as I believe it is headed towards a test of 15,325 today. This level is crucial for the entire market. NQ, being the upside leader this year, sending a bullish message across the indexes if it can break above 15,325. If that happens, we could see 15,983 in the upcoming sessions.

In RTY, they’re sitting right at the bottom of my bullish zone at 1738. That level is key for me. If it holds, then I see 1750 coming quickly this morning. It will be a pivotal level for RTY today. If 1750 holds on the downside, then I think the bears can regain momentum and take us back to 1738, possibly 1719. If the bulls can reclaim 1750, then that opens the doors to 1773-80, where the bulls face another major test. RTY has been the weakest market all year. If they can surpass 1780, we might witness a sharp rally up to the 1840-50 area. I can see bears running for cover and late buying coming into RTY as the bulls chase it.

Overall, today the NQ is my preferred market to trade on the long side because they are the strongest. I always like to trade the strongest market when I’m long and the weakest market when I’m short. I’m already long on RTY at 1738 from yesterday’s session, and my stop is just below 1734. I took some risk off yesterday at 1745, so I’ll let the rest of this position go to the stop or let it go to the upside. ES is in the middle right now, and I don’t love the action, so I’ll focus on trading RTY and NQ today.

Keep it light and tight. Cheers, DELI