October 8th, 2024

Sell rallies, not breaks. Buy breaks, not rallies. Momentum has stalled for the bulls, but they are far from beaten. We’re just in a mean reversion phase for now. As long as we remain below 5813 on a closing basis, I think we’re headed to 5688, which will be a key test for this market.

How do day traders navigate this environment? With daily Bollinger Bands in contraction and daily moving averages bunching, this tape can be traded on both sides for day traders. I believe rallies will continue to get faded until we test 5688 or achieve a daily close above 5813, so I would likely favor shorts in my strategy for now. If we approach 5688 and I see buy signals, my focus will shift to longs from that point.

YM looks the same as ES right now; I think they’re temporarily in sell-the-rally mode. 42,694 is key resistance, and I’m looking for 41,958 to test in the coming sessions.

NQ and RTY are just two-way tapes and seem to be traded on both sides for the foreseeable future. Not my favorite looks for indexes.

I remain in the path of Hurricane Milton, so I’ll be focused on that throughout the day. My thoughts and prayers are with everyone in its path. Stay safe, fellow Floridians.

Cheers, DELI