Morning Scoop
The futures market is up, and it appears we’re in for a significant gap up in the markets today. The key concern is whether this momentum will hold throughout the day or if the market will quickly give back its gains. Let’s take a look at the charts to assess the current situation.
Markets
News
Tomorrow’s decision regarding interest rates by Powell is still anticipated, and many traders are waiting to see what actions will be taken.
S&P 500 Futures Update
The futures market has broken out this morning, giving stocks a boost at the open. We can expect a gap up in the market today. However, the big question is whether we can sustain this momentum throughout the day or if the market will fizzle out due to anticipation of Powell’s speech tomorrow.
Forecast
Yesterday, the markets experienced some volatility during the session but didn’t make significant moves. I anticipate a similar scenario today, as many traders will likely remain cautious due to the FOMC meeting tomorrow. With so much attention on this event, it’s difficult to envision any strong conviction in the markets today.
Chart Analysis
Break it Down
Taking a closer look at the QQQ chart, I’ve identified some clues that suggest the direction in which the price may move in upcoming sessions. I’ll walk you through the chart, the lines you see, and the mistakes I made.
Follow the Trend
I have a tendency to look for counter trend trades that go against the general market sentiment. Although I’m not sure why I do this, I have been trying to avoid it. As part of this effort, I’ve been analyzing the QQQ chart on a 65-minute time frame.
When I dig in, I noticed three moving averages: the yellow line represents the 4-hour 200 moving average, the green line is the 50 moving average on the daily, and the purple line is the 100-day moving average on the daily. While they are slightly flat, they are all headed in the right direction, indicating an upward trend after crossing over on the 13th.
Additionally, the MACD is showing an upward trend on two time frames. Despite these indications, I still decided to short the stock on a 15-minute time frame.
Learn
In trading, we must learn from our mistakes. Rather than thinking in terms of winners and losers, we should approach it as an opportunity for growth and learning. For instance, when I saw signs on my 15-minute chart that suggested a short trade, I acted on it. However, I overlooked the fact that on a higher time frame, the chart indicated an upward trend. I need to identify the higher time frame and use it to my advantage to avoid getting trapped in a losing position before entering the trade.
Wrap-up
I’ll be monitoring my usual stocks – TSLA, AMD, QQQ, SPY, and IWM. I prefer to focus on these five and pay close attention to their price action and movements. While I currently have no plans to make any trades, I will be analyzing some charts and may put together a strategy for today. However, given the gap up, I need to be highly selective and cautious as we could potentially experience a stall in the market.
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