More Traps Than a Big Game Preserve
Edge Levels (ESM4): 5150-55, 5170-75, 5190, 5215, 5235, 5245, 5255-60
You can access the MGI document HERE for the latest Edge Levels and insights.
It’s National Only Child Day, so please tell a trading friend about this newsletter if you find the egocentrism of that ironic.
Five Trades for RTH 4/12/2024:
Backtest of 5245 (short). Three stars. Overnight inventory reflects textbook Acceptance of the key trendline from early April. This tells me that bears want a new low before letting Price assume its upward trajectory.
Backtest of 5235 (short). Two stars. Same as above with less favorable entry. One might have to give this area room or scale in to average down higher.
Reclaim of Overnight Low (long). One star. SPY 0.00%↑ will open well beyond its Expected Move, and it’s a bull market, so one can’t ignore reclaim opportunities of significant levels. Yet, the average continuation on Gaps > 40 points is historically ~35 points. We haven’t seen this work out for bears in a very long time. In fact, when’s the last time you can even remember a trend day down?
Breakout of 5191 (short). Two stars. This trade was on my board yesterday and proved to be a loser. Bulls have defended this zone no less than six times since Wednesday. I’m willing to bet on it breaking today.
Reclaim of 5170-75 (long). Two stars. I’d like to see Price above 5180 to enter. This is Four Sigma today, which is always a strong trade. I’ll also give it bonus points for confluence with the Bear Trap pattern, pictured below.
Fun fact: if you look at yesterday’s energy PPI numbers, you’ll notice a decrease of -1.6 percent. This reflects a convenient “seasonal adjustment” eclipsing the real numbers. The actual energy numbers were likely closer to a 5 percent INCREASE.
The Stock Trader’s Almanac often reiterates how presidents do everything they can to manipulate the economy to stay in power. Especially during election years and regardless of party. The PPI shenanigans1 is an excellent example of this for all my EMH friends!
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Stay classy until then.
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LEGEND’s word of the day. It means “secret or dishonest activity or maneuvering.”