Posted 9:30 AM ET – Expect a choppy downward bias at least until the July FOMC statement. After big moves down, expect a bounce that lasts a few days. That means you have to keep your trades short term. Short stalled bounces and take gains on deep drops. The issues that have been plaguing the market are not going to be resolved this summer.
Economists are lowering growth projections for China. Covid-19 is spreading in Beijing and GDP growth of 3.7% is expected for 2022. The PBOC is concerned and they cut rates when the rest of the world is raising them.
How abysmal are your growth prospects when you have to maintain negative interest rates until Q3? That is what the ECB intends to do.
Swing traders should remain on the sidelines. We tried a short Friday and we had an excellent entry. I expected stocks to close on their low Friday and I expected follow through Monday. We did not get that pattern so we scratched the trade and we went back to cash. With the holiday approaching the volume will dry up. We have been patiently waiting for our window to swing trade and that has been prudent.
Day traders, go with the flow. I am not being lazy; the game plan has not changed. Evaluate the first 45 minutes of trading and watch the 1OP cycles. When you have a bullish cycle that produces little, the next bearish cycle will be a good one. When you have a bearish cycle that produces little, expect a decent bullish cycle. It will guide you through the ebbs and flows of the market. If we get a trend day, watch for brief pauses and reversals within the trend. We do not want much in the way of retracement. Use the open of the most recent long candle that agrees with the trend as your guide. You want that preserved. We also do not want these pauses/reversals to last more than 30 minutes. If the action is choppy and directionless today, we could be dead until the FOMC minutes Wednesday. They will NOT reveal anything new. The volume is likely to subside into the holiday.
Support is at the low from Monday and resistance is at the high from Monday.
THESE INSTRUCTIONS WILL SERVE YOU WELL FOR THE NEXT 10 DAYS. I WILL BE TAKING TIME OFF TO WORK ON MY MOBILE APP RELEASE IN JUNE. TRADE WELL.