January 4th, 2024

Bears are winning the battles. As we start off day 3 of the new year, the bears have consistently come out on top. Intra-day, the flows have consistently leaned towards the sell side. Any buying that has entered the scene has been abruptly halted when the market reaches VWAP anchored to the first day of the year. When a market respects the YTD VWAP to the downside, it is generally a bearish sign – something we’re seeing across all major indexes. I’ve also observed similarities in the charts of the 10 YR (ZN). Perhaps the market was too optimistic in predicting six rate cuts next year. The reaction to the Fed Minutes released yesterday didn’t mirror the reaction we saw in their previous meeting. An initial rally was quickly sold off once the ES YTD VWAP was hit, leading to fresh lows for the day.

My trading strategy remains consistent. I will continue to sell the rallies until I see indications that suggest otherwise. I’ll maintain a swing short position in ES and base my trades around the short side. My 3-minute opening range strategy will act as my guide throughout the trading day.

Some points to consider:

NQ remains the downside leader and has hit my first downside target of 16,533. Currently, it stands below this target which bolsters the potential for ES bears to reach their target of 4689. If NQ manages to climb back above 16,533, it could spur on the bulls in ES and trigger a pullback today.

Yesterday afternoon I snapped a pic of my Tradovate chart showing my trades from yesterday. I’ve been trading cautiously, focusing on building rhythm into the new trading year. Simply put, I stay short, wait for rallies, observe the action at key areas, take shorts, manage risk, and retain a small short position until the daily charts suggest a change of course. If ever the daily charts all align in the indexes, I won’t go against those moves intra-day. Why contradict my own work? Many day traders overthink and overtrade during trading hours, a habit that hampers a successful career in this field. I’ll delve into this more in an upcoming Discord livestream. Stay tuned for my announcement regarding the schedule of this live session. Cheers, DELI

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