April 18th, 2024

Rallies are not sticky. Inflation may be sticky, but rallies right now are likely not. Market environments may feel like they change daily in this volatile market, but that’s because day traders are so focused on the short term they lose sight of the medium term.

There is typically a side of the market that will be favored for weeks or months, and although it won’t be the case every day, it will help you focus on one side and keep you away from overtrading a tape that will chew you up if you’re overtrading. ‘Sell the rally’ is still my focus; daily Bollinger Bands remain opening outward, failure to regain YTD VWAPs and declining short-term daily moving averages keep it very simple for me… the rallies won’t be sticky.

My plan for today is to focus on the short side in the major indexes. I anticipate the market to push lower, but remember, it’s still a bull market, so it’s crucial not to be overly aggressive with short positions at any level. Instead, be smart when shorting—keep positions small and avoid pressing too much into lows. Never doubt the bulls’ ability to pull us out of a weak situation in a bull market. Being small and smart is key. Refrain from overtrading.

I will be live on Develop Your Edge today discussing the relationship I’ve been talking about a lot in my note; RTY vs ZN. I will also be giving live commentary on today’s action. Here’s a link to set your reminder if you’d like to join the live stream: https://www.youtube.com/watch?v=3edMAXO_QsU

Cheers, DELI