April 16th, 2024

Range Expansion: Yesterday’s daily closes in the indexes are all signaling range expansion to the downside. Geopolitical tensions and higher interest rates from the selloff we’ve been seeing in bonds are finally starting to cause some cracks in this bull market. How long it will last, we don’t know, but for now, it’s a sell-the-rally market.

I believe we’re in range expansion lower because Bollinger Bands are expanding and opening up like a mouth on a daily basis. This is my strongest indication that ranges will expand, creating an environment where hugging the bottom Bollinger Bands tends to lead to trending lower for a period of time. Additionally, we’ve had daily closes below Year-to-Date Volume Weighted Average Prices (AVWAPs), which is a good confirmation that the average long position for 2024 is likely underwater.

When technicals align with negative macro backdrops (rates rallying, dollar rallying, geopolitical headwinds), we see the strongest moves.

I will be looking to short into rallies intraday in the indexes, favoring the weakest index based on my 3-minute opening range and VWAP strategy. I’m anticipating the market to continue to push lower today. Remember, this is still a bull market, so it’s essential not to throw in the towel and go all-in on short positions at any level. Instead, it’s about being smart when shorting—keeping positions small and not pressing too much into lows. The bulls are not beaten in the war; they are just losing the short-term battles right now.

Keep it light and tight, and always keep one eye on the bond market because where they go, the indexes may follow.

Cheers, DELI