February 22nd, 2024

Good low in NQ. I know that the talk will be about NVDA rallying the NQ, and rightfully so, but what is important from a technical perspective is that the recent low in NQ is a ‘good low’ and a low that the bulls can play off of. I always look at the markets from a perspective if we have a good high or low and if the market can lean on that level to build on. The low in NQ is a really good low for several reasons; first off it basically hit my target of the YTD AVWAP (came within 22 points), it spent little time down there, it made a capitulatory move off the lows. When a market fails to hit a level, such as the YTD AVWAP, that’s actually a bullish thing. Remember, if people can’t get in because it doesn’t hit a level and it spends little time there, so people have to chase it higher (shorts and new longs), it’s a good low.

Now, how do we trade it? I’m only looking long in NQ now. I see the NQ making new highs for the year in the coming sessions and on its way to 18,450 areas. Today I will wait for pullbacks and look to buy some calls and potentially futures. Ideally, a pullback to 17,780-750 would get me in. The risk is a daily close back below 17,680 as that would shift me back to being bearish.

For ES, I think it is being pulled higher, but not as bullish as ES as I am NQ. ES doesn’t have a great low, and I think it can churn a bit in this range. Because the NQ is so strong, I think ES follows it higher, but expect a bumpy ride… especially today as the technicals in ES may need a day to settle to find levels to trade off of.

RTY remains a no trade for me. Still a two-way tape that has no clear direction.

Yesterday, in the Discord, I discussed why I covered my puts before the NVDA number. I was looking for 17,350-330 in NQ, and it came up just shy as I noted. When the risk becomes greater than the reward, you have to take the money. We’re within 25 points of a target in NQ before a huge NVDA number. Take your money and get a clean start after the data. Just because we have targets doesn’t mean the markets will reach them. Protecting your capital is always number one.

Don’t chase today; let the market force you in based on your strategy.

Cheers, DELI