February 27th, 2024

Churning. The Bulls only need one thing to happen right now and that’s for the market to chop around in a range and churn a bunch of people into thinking bearish thoughts, but ultimately go nowhere. Bull trends are usually very choppy, low volume, low volatility, and they get people thinking there’s a top in almost every day, and then the next thing you know, we’re at highs again.

This is when I go back to one of my favorite scenes in ‘Catch Me If You Can’ when Frank Abagnale Sr. said: ‘Two little mice fell in a bucket of cream. The first mouse quickly gave up and drowned. The second mouse wouldn’t quit. He struggled so hard that eventually he churned that cream into butter and crawled out.’ That is what happens in bull markets. The bears get burned out, and the bulls crawl their way out of their positions as the market makes new highs.

How do we trade it?

For NQ, I remain long OTM calls looking for 18,450, and during the day, I will also search for long setups using short-term strategies. Monitoring MenthorQ daily GEX levels and my work, I see a clustered range from 18,025-17,900. That is the churning area, and for the bulls, it’s essential for NQ to maintain above that area to gain any traction. If we surpass 18,025, I believe buyers will push us toward 18,100-25, and beyond that, we are on our way up to 18,450 in the coming sessions.

If we drop below 17,900, we dip down to the 17,750ish area in a swift move. With that said, I am still solely considering long positions for now.

The churning area for ES today is 5105-5080. Surpassing 5105 could lead to a test of 5152, likely providing some resistance along the way at 5124. Failing to sustain above 5080 may bring 5050-5033 into play today. A further drop below 5033 could lead us to the gap and potentially down to 5005-4995, which represents significant daily support.

RTY starting to look more bullish to me, but we need to see daily closes outside of my boxed zone on the daily or else it could be another head fake. Small and smart.