November 16th, 2023
A day of divergence. We have the daily charts still screaming bullish, while all of the 60-minute charts are telling me to be short today. When this starts to happen, that tells me that the market is getting ready to top out. How do we trade this when there’s divergence? Small. When a market has divergence between timeframes, that is when most traders get chopped up. They are probably right in their trade, but there are bounces that just keep getting them out. That all comes down to position sizing. Trade small, trade smart, and do not add into breaks, only sell the rallies.
My plan for today:
ES: As long as the ES remains below 4523, I will be looking for a target of 4473. This morning, I’ll be initially looking to sell rallies up to the 4414-16 area with a possible add up around 4420-22 area. My stop at 4426. My target to take some risk off is a AVWAP sitting around 4489.50. From that point I will leave trailers for the possibility of 4473. Since this is a divergent tape, I won’t be selling into breaks, only into rallies. Small and smart. If the ES gets an hourly close above 4523, the tape shifts back to bullish and we can grind higher.
NQ: As long as the NQ remains below 15,927, I will be looking for a target of 15,739 today. I’ll be looking to short the NQ this morning from 15,840-890 with a stop at 15,950 and a target of 15,760-730. Something to note is a key AVWAP at 15,790 that could add support or accelerate selling if we get below it. If we get an hourly close above 15,927, then the tape shifts back to bullish and we can grind higher. If we get an hourly close below 15,739, then I think we could be headed to the 15,580-550 area.
RTY: As long as the RTY remains below 1816-13, I will be looking to sell rallies with a target of 1760. RTY is my least favorite of the 3 indexes to trade to the short side right now. This tape has been beaten up so bad, and the rally the other day is just telling me to proceed with caution to the short side. If we get an hourly close above 1813, then the tape shifts back to bullish and we can grind higher.
Keep it light and tight. Cheers, DELI
