April 12th, 2024

In search of a good low or high to trade off of. We conclude the week with the same clarity of direction we began with, stuck in a two-way market that’s trying to find a good low or high to trade off. Yet, we’ve not located one. When the market discovers a solid high or low to trade off, it can then manage risk in that direction.

I’m not fond of the highs or lows in the Indexes currently, which explains the weak handed positions pushing the market around all day. It’s a cycle – one day we deal with divergence in the indexes, the next day it’s rates shoving us around, and so we continue this search for something to guide us to a good high or low.

What stands out today is the ZN (10 YR Futures) rally, and they might have found a good low to play off of for now. We won’t know for several more sessions, but for today the bulls are out in ZN and rates have dropped from their recent highs. This could potentially boost RTY, as long as they can remain above their YTD AVWAP of 2045. My favorite play for today is trading RTY to the long side leaning on 2045, but it will be minor and I won’t resist if we can’t maintain trade above 2045, even if ZN continues to rally.

As for ES and NQ, they are still within my boxed in areas highlighted in the charts, and I predict another day of two-way choppy tape. The key is to keep it small and have solid confirmations on your short-term strategies.

Keep it light and tight today and wish you all an excellent weekend!

Cheers, DELI