April 19, 2018
By Geoff Bysshe
Today’s analysis is by Geoff Bysshe. Mish will return Monday April 23rd.
Today, Wednesday, was a bit of a disappointment for me.
First, today was disappointing for me because last night we issued a buy alert in our Alpha Rotation system which has absolutely crushed the market over the last 10 years, and never lost 3 trades in a row!
As a result, I was eagerly hoping for nice big trend up day even though this is not what the Alpha Rotation system attempts to predict.
Alpha Rotation identifies big trends to profit from in the SPY and TLT, over weeks and months, not one day.
However, if you’ve been reading my recent commentary you know that I’ve been be looking for a big move in the SPY right now, so the Alpha alert added fuel to my fire.
If you want to learn more about the Alpha Rotation system I’ve re-opened the training for 24 hours because I couldn’t write this post and not give you the chance to see what got me so excited!
If you watch the replay of the training on how the Alpha Rotation system works, you’ll hear me sugest that I was eagerly looking forward to its next move to a long position, so that I could establish an aggressive long position (which is one of several ways to trade it).
So we got the alert I’ve been waiting for, I put on my leveraged position as planned, but that’s not all…
When our automated system falls in alignment with my discretionary thinking I will often use the opportunity to put on additional positions that I’ll manage on a more short-term basis, and this is where I was disappointed.
I had a resting order to establish a long position substantially larger than my mechanical longer-term trade in the system.
This resting order was based on our Opening Range criteria to identify opportunities to catch big trend days.
It never got hit. ☹
I was disappointed but not surprised, because…
Here are the charts that I believe every trader should consider if you care at all about intra-day market action….
They are intra-day charts with consideration for the range of the first 30 minutes of the trading day, the “Opening Range”.
A good trend day will have the SPY, QQQ and IWM all breaking out over their respective day’s 30-minute opening range.
As you can see in the charts below, today the SPY was not able to substantially break its O.R. high, and as a result provided you with insight that today was not likely to be a big trend day like the QQQ and IWM were suggesting!
As a result of this divergence, I did not buy a bigger long position and I’ll have to wait for another day.
The Opening range won’t anticipate the markets’ moves for the following days, but it will keep you on the right side of the market on any given day.
I’d recommend following it. It’s full of valuable insight like today’s message that the QQQ and IWM may pull back before the end of the day.
S&P 500 (SPY) Second close over the 50 DMA confirms the bullish phase, but it’s right under the 100 DMA. Next big resistance at 275. Expect support at 268 - 270.
Russell 2000 (IWM) continued to run like a leader, but closed in decisively at stopping at logical resistance. Look for support at 155.50-156 then at Friday’s low and 152.
Dow (DIA) Respectable consolidation day considering IBM weighed it down. Key support around 245, support at 241.40 and 235.
Nasdaq (QQQ) Nice consolidation day. Next big resistance area 169.50-170. The 50-DMA is 163.87 is now initial support, then 161 then 160 and 159.25. Then 153 is the big low level.
Every day you'll be prepared to trade with: