Comments on: Positive Divergences Increase Odds Of Stock Market Rally

By: Jeff Vandenburgh

Jeff Vandenburgh — Wed, 16 Aug 2023 20:03:31 +0000

For conservative trend-following systematic traders, the break of the 50dayMA in the SPX and RUT yesterday was the first signal to switch from long to short. The confirmation of the signal occurred when price remained below the 50MA at today’s. Further confirmation for these conservative tend-following systems will be reached if price remains below the 50MAs by the end of the week. Before getting to bullish, it might be important to remember that there are CTAs and other large players who are just now beginning to sell out of their longs.

By: Scott

Scott — Wed, 16 Aug 2023 19:14:21 +0000

ES expected move hit. NQ also cracked the big 14976.50 level.

https://rightsideofthechart.com/wp-content/uploads/bpfb/2910_0-50981300-1692213211_esexpected.png

By: Jeff Vandenburgh

Jeff Vandenburgh — Wed, 16 Aug 2023 19:01:44 +0000

In reply to Scott. I've got the weekly expected move for /ES down at 4410, and for SPX down at 4396.50. I don't have any confidence in price necessarily getting down there this week, but I also don't have much confidence in the 50-Exponential moving average. I do have confidence in the 50-SimpleMA, though. And I believe the price action in interest rates and currencies trump them all. Why second guess price action when the boldest of indicators continue to say "risk-off?"

By: Scott

Scott — Wed, 16 Aug 2023 18:22:23 +0000

In reply to rsotc.

If I hold overnight, it will be a light position. Scalping short intrady off of the pops. Thinking we do at least get ES to tap the expected move this week (4425) and I’ve posted several times about NQ’s expected move being suspiciously at/around the 14802 fib, so that’s still a very real possibility. A lot of times when those weekly expected move levels are right at significant support or resistance, it’s a clue where we’re headed.

Biggest bull argument is opex on Friday. Would make sense to retrace some of this move for “max pain” with out-of-the-money option holders on both calls and puts.

By: rsotc

rsotc — Wed, 16 Aug 2023 17:46:25 +0000

In reply to AP. I posted a video after this post was published earlier today. Bearish if the divergences are taken out & also bearish if both SPY & QQQ close solidly below their 50-day EMAs but until/unless that happens, this is a key level that buyers often step in, especially on the first pullback to the 50s in months.

By: rsotc

rsotc — Wed, 16 Aug 2023 17:43:59 +0000

In reply to Scott. Just consider a relatively tight stop on those short since both SPY & QQQ are testing the 50-day EMAs for the first time in months... a likely spot for the buy programs to start firing off, especially on an intraday undercut followed by a recovery back above the 50s.

By: Scott

Scott — Wed, 16 Aug 2023 17:12:54 +0000

Reminder regarding expected moves.

https://rightsideofthechart.com/wp-content/uploads/bpfb/2910_0-79894600-1692205950_1212-rew.png

By: Scott

Scott — Wed, 16 Aug 2023 17:07:50 +0000

NQ chart. Probably needs to tap this big TL below. Clear downward channel until/unless broken.

https://rightsideofthechart.com/wp-content/uploads/bpfb/2910_0-71149700-1692205607_nqq22.png

By: Scott

Scott — Wed, 16 Aug 2023 17:03:54 +0000

We’ll see if this sticks.

https://rightsideofthechart.com/wp-content/uploads/bpfb/2910_0-16587500-1692205414_es-tl.png

By: Scott

Scott — Wed, 16 Aug 2023 16:56:15 +0000

Short it is.