This day was a rare occurrance where 3/4 internals supported a strong thesis. Why is this actually a BAD time to go short even though 3/4 internals are short?
1. News
- News creates an entirely new chart at 10:00...that is why this strategy is best used from 10:30-11. If that turn is noticable it can spot it but on a day like this I would have a very hard time thinking going long is the right move. Anytime there is news I need to make sure I am more cognizant of it than ever. That is a NEW MARKET......
2. Weekly trends
- There is a very strong weekly trend to the upside and we hit that level perfectly and bounced hard on the ES. On the chart above in the aggregate we are actually pushing through that without even tapping the trendline so there is another strong reason to not short, the ES is just lagging the NQ.
3. Are we green or red on the day?
- Even with 3/4 red the market was still green the entire day, Mag7 got its NVDA push and was never even below its OR the entire day. Indices also held above their PDC immediately after touching it
4. 10:00 Data Candle
- At the news point the 10:00 candle can form a high and low and if the way we break that high or low after the first 5 minutes is extremely important for the days price action. Usually if we hold the low of a data candle like that I can safely assume that the top could be taken out and if it does get taken out then the entire chart is broken and downside is extremely unlikely, Chop could occur or we could break HOD in which case I never want to be short.
5. Mag7 is very strong on the day while indices held back a lot.
- There is so much importance in NVDA specifically and the mag7 as a whole right now. It needs to be watched very carefully for price action as it is truly the leader of this market way more than the indices are. In this scenario the mag7 held its OR breakout quite easily and was also very green on the day just pushing higher and higher
6. ADD looks god awful I would love to short when ADD looks like that. I think its quite interesting to see how the VOLD and ADD both made NLOD when the indices made its low on the data candle. The indices held its low and the mag7 broke it but double bottomed and ripped higher. I usually think that the vold add NLOD scenario is a sure fire way to see continuation but in general it lags just like every other indicator. I need to realize that PRICE ACTION is the true king of all trading. The VOLD ADD are simply an afterthought if the price action is interesting. If they confirm I have a great chance at a high probabiltiy trade. Today they did not confirm and instead they actually wouldve made me lose if I followed my framework.
7. TICK is a good tell given it never made it into -600s
I forgot to mention reason #1
If we have a 2% intraday candle and hold the low and are coiling up into a huge breakout day then yes you do not short........EVER. If we coil like that and do a huge breakout and hold it then rip up to new ATHs that is a very very good long signal. I should be using the daily chart first then going into my intraday because when you look at this daily its insanly pretty to the upside.
