April 4th, 2024

Rates in a Range. Rates are the primary subject in markets currently, but as I mentioned yesterday, unless they significantly spike from here, I believe equities will disregard them (for now). We’ve seen a high in Yields, but it seems we might just settle back in the range, and if anything, we could slowly rise, but it’s less likely we’ll see a strong surge. One thing about markets nowadays is that they adapt to changing environments rapidly and price in new risks. The ‘new’ risk was that rates may not decrease, not that they are necessarily increasing. Even if they did increase, it would only be by a modest amount.

What does all this imply for day traders? It means to keep an eye on ZN, but unless ZN drastically drops and rates rise, they may just remain rangebound and it’s business as usual for Equity bulls.

RTY has been my focus as they are the most sensitive to rates, and this morning RTY is higher while ZN is lower. This aligns with my theme that rates may simply be rangebound again. Traders specializing in RTY should closely monitor ZN today; if ZN bounces, I believe that might drive a rally in RTY and I would look at short-term trade signals for buying opportunities.

ES is still within a tight channel and will likely remain so for the foreseeable future. Tight ranges favor the long side, but day traders can trade both sides.

NQ is the market that I foresee losing momentum. The charts are not compelling me to buy at this moment, and the bulls have lost their energy. They can regain it quickly in NQ, but I wouldn’t be surprised to see them struggle in a choppy tape for the upcoming sessions. It’s a two-way tape for day traders, but don’t get overconfident on either side. Expect pullbacks.

The key right now is to start small and stay in the game. This is an environment that will continue to test the patience of day traders. Those who adhere to their plans and execute well will be rewarded when markets return to a cleaner state.

Cheers, DELI

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