Hmm... Something Different
For the first time in a long time, bonds went up when stocks went down. This comes after nearly an entire quarter of the treasury market dropping every single day, often more times than not with the entire equity market. It has been risk off.
Yet today, bonds ended up turning around in the back half of game as equity risk got destroyed. Short-term level up to the 144-08 area on the classics is what we are looking for in the short to medium term. First target 142-10.
Dec 2023 Eurodollars with the 2H Combo 13.
This morning, we notified the 2H 13 Sequential that completed on ES right before the open. Did we expect this entire demolition of last week of work in a single session from this 13? Nope. I thought it was going to drip slightly lower to sideways. Does this change the picture? Maybe. Too early to tell.
Why even try to buy dips? Well look, the selling played out. If you wanted to short, you should have done it at the open today. Nevertheless, bear markets are bear markets and when stocks go down, they trend down and with 0 mercy. So is it okay to short here? Sure, if the market is bearish. What I mean is -- if you're going for the short ride make it count. If these levels fail, we have another 5% lower very quickly in the NQ. On my work though, we are approaching the TD Trend Factor level.
According to our backtesting app, the market closing at 20 day lows like this is very rare and quite bullish. Of course this has largely to do with the seasonal factors around Spring time. Nevertheless, we don't want to fall into the seasonality trap with the rest of the village if it does not end up coming to fruition. We have a short leash on risk here.
KWEB completed a DeMARK 13 sequential today. This comes right into news stories from the FT about funds liquidating and removing China risk. The 120M chart is also opening up with a 9 buy setup.
So the gist is this: it feels bad, but risk-reward is still higher. Expected value feels like the trade is more likely to work if one plays for continuation shorts on smaller size but holds for the real puke. At the end of the day, I am a trend trade. I use DeMARK in the short term to capture execution. Right now the higher time frame trend is down. The price action around FANGs and Tech did not feel like anything bullish. Nevertheless, bond inflows today are a completely new / refreshing inflow that we should make note of. Be on the lookout for the Plus posts tomorrow.