Aug 05 Plan

Today’s action was very similar to yesterday’s except for the fact that we spent more time above 3290, and consequently the volume Point of Control migrated a little bit higher. The fact that buyers have defended the gap below, and we continue to find acceptance at these higher prices is a bullish sign. 

The RTH session opened right at yesterday’s RTH lows. Right at the open, buyers stepped in and drove prices inside yesterday’s Value Area. Most of the day’s selling came in around yesterday’s RTH high and just below the overnight highs. We saw a small liquidation break late in the day that took out weak-handed longs. These sellers were met once again with responsive buyers right above the open. All of this responsive trading is occurring in a very mechanical manner at visual references; this tells us that short-term traders are still in control of this market. 

Once sellers weren’t able to take advantage of the liquidation break, and fail to offer prices below the open this ignited an end of day rally that left a spike on the profile; we closed above yesterday’s RTH high and the ETH high.

Going forward, we should observe the “Spike Rules”. Acceptance within the spike is bullish. Buyers should defend the spike. If this happens, it would mean that new business longs are entering and finding value at these higher prices. Failure to defend the spike would mean that most of the buying was made by sellers covering their shorts. Like I’ve said before, being above 3267 is bullish but that doesn’t mean that you can’t look for selling opportunities. If buyers defend the spike, we should continue to assume that the February 21st gap we have above will get filled and later reach my 3331 target.

I said yesterday that for the rally to continue, NQ_F must hold above 11,070.00. Sellers tried during most of the session to hold this level but buyers ultimately were able to close above it. For the rally to continue, I would like to see NQ_F above 11,120.00 by tomorrow’s RTH open.