Weekly Blog - Sunday, June 13, 2021

Hello traders.


I used to make Weekly Videos EVERY SUNDAY... then started to make blogs. But the thing is - not every week "deserves" to be analyzed in details, and blog format - instead of lengthily 20-25 min videos had better feedback.


1) Scheduled data next week


Nothing much on Monday.

US Core Retail Sales m/m and Retail Sales m/m on Tuesday.

FOMC Event on Wednesday: Economic Projections, Statement, Federal Fund Rate AND FOMC Press Conference. No doubt the event of the week.

US Unemployment Claims on Thursday, Monetary Policy Statement and BOJ Press Conference on Friday.



2) Charts and thoughts


Let's start with some large time frame charts from US markets first.



More than a decade of SPX inside the channel - the above chart is made on Futures, but the same you will get on the Index. Next one is on Index, but on Nasdaq.


Let's check on the volatility - VIX Weekly chart is the next one.




Markets grinding higher, while volatility grinding lower - a bull market. However, prices of both SPX and NDX are very close to the upper edge of a decade+ long channel. The "problem" when you look at weekly and monthly chart IS, that what looks extended, can be extended for more UNTIL IT HITS the resistance, and that in time can take weeks or months. Buyers with the advantage until proven otherwise - and THAT we will see without a doubt on breakdown of important Supports. Until then, sideways, sideways up PA like we are observing for weeks, can continue. Visible on the next chart.



When market really start to moves to the downside - we get channels breakdowns like on that 10% correction in Sep 2020. I get goosebumps when people say after extended runs and now market is finally making a good size pullback: "Nobody could predict that". I mean - WHAAAAAAAT? Do you ever look at the charts or just in your Excel where you keep your portfolio data? Where is the invalidation point? Where is your stop? Can expectations NOW be the same like a year ago? All the questions for the traders that want to go long now. Be "nimble and flexible"... not stubborn.


Personal opinion

Swing longs on indices IMO, need to be taken on the pullbacks, better odds are there, not to wait for the breakouts, since breakouts on indices are rare. Just think about that for a moment - Index is a BASKET of stocks. Many stocks. To get a breakout on index, you need broad market rally, every sector to rally. While on INDIVIDUAL stocks you don't need that at all. There will be stocks making breakouts from bases even when general market is going down. Also, indices are LESS volatile than most of the individual names.


Let's move to German DAX now.


20+ years are in this chart. Entire April and May, DAX spend licking the upper RAIL of the Monthly channel. (Upper line "evolved" into the rail). One of the REAL index breakouts happened on DAX in March, above 14190 - let's observe the daily charts now.


DMA50 acting Supportive, we have a bigger red channel and the smaller one - which currently is holding the price.


Zooming on the Cash Index chart - price is in the channel.


Further zoom - FDAX 240 min.


What to conclude after all of this DAX / FDAX charts?

Buyers with the advantage on the higher timeframes, as long as they can hold above the April highs - basically above 15,500. Two sided activity and opportunities for day traders will still be available, both long and short, like spoken and showed in the last Recap video.




3) What to learn from previous week (in day-trading German DAX)


- Large timeframes vs. small timeframes. Always managing your trades by looking to at least two different timeframes. Having 30/60 min chart opened as well, not only 1-2-3-5 min.

- How good for an intraday bias a bull-bear zone can be, IF placed correctly, like on Thursday, when we got High of the Day RIGHT at it.

- False breaks and repetitive setups.

- Gauging the market strength EARLY - to determine do we have a strong PA, and EVERY DAY of the last week started with the move down, BUT the only follow-through was on Wednesday

- ECB day and market behavior INTO the release, and during the event


For Subscribers: Check the Setups Gallery, posted below Recap video on Daily dose of DAX page, for repetitive setups and repetitive market behavior. This can be a good tool to reinforce your conviction to entry on repetitive setups.


 

In short term trading it is very important to properly understand context heading into every day, to know from which side wind is blowing - who has the short term control, and which side will be forced to liquidate IF and WHEN market hold above or below a certain level. What is the level of volatility, what can we expect from any particular day, what market already done in premarket session, what possible setups can be available, and so on... the things that we constantly learn in the DAILY DOSE OF DAX.


Cheers, Relja a.k.a. StrayDog