Great Kick-off To The Week With The Negative Divergence Trades

Well, hello gang, and welcome back! I hope everyone had a great trading day today. In the Active Trader Room we had another great day with positive traits long out of the gates and short as the market hit the top of the day and for those of you that were in the Active Trader Room you got to see some great trading. I’m filling in for Rob as he’s a little under the weather this week but starting to turn the corner so things are things are looking up again. In the Active Trader Room today we were looking for the market to start off the day rising and we had prognosticated a rise into the 3374 area we in fact talked about that the night before and that’s precisely what came to fruition today. We had the NFIB small business optimism survey come out – small caps were doing well on that -earnings aren’t really the play that’s making the market move up it was the injection from the PBOC that People’s Bank of China put out about 130 billion dollars worth of stimulus on Sunday night and we saw that create a risk on reversal off of Sunday night’s lows and when you look at the market and you look at yesterday, Monday, and today it’s very similar set up to last Wednesday and Thursday. It’s almost as if we’re getting a similar playbook to last week but it’s a little bit more advanced or mature would be a better way to put it. If you take a look at the regression channels on the bottom of your screen here one of the things we were mentioning to all of the members in the Active Trader Room is if we see the market today close above precisely 3364, which happens to be an important regression line, we’ve got a better chance to go sideways to up overnight and try to retag the highs. However, now if we end up closing below 3353 or generally below 3364 I’ve got a better chance to overnight come down and test about 3340 to 43. We don’t really get worried about this market that’s still a strong bullish market as we can see straight up over here I don’t really get concerned until we come down we take out 3323. For those that don’t look at market indices as a signaling mechanism and our focus just on stocks, market risk sector or stocks specific sector risk or space risk and then stocks specific risk breaks out in about 50 30 20 in terms of percentage of importance when you’re looking at the market short term. So, in today’s trade in to the end of the day when we were looking at what to do overnight the idea of the market having a little more jitters overnight going sideways to down – looking inverse on equities – looking long on volatility. Looking at more defensive options was where we were headed. Now, I’m gonna bring up Rob’s toolkit here in front of you and we’re gonna take a look at the market. You were looking at it on a day over day basis we’re looking at it now on a 60-minute basis.

So, we can go all the way back to the heart of the markets negativity with the Coronavirus which was all the way back over here on January the 31st and we saw all of that mess on the Sunday night February the 2nd into the 3rd and what we got over here was the People’s Bank of China injecting stimulus and when they did that you can clearly see the throttling on the tool over here on the fast trigger versus the core trigger which typically means we’re gonna get another bounce and sure enough we did. We got a higher high made and the penultimate high was made on this candle for last week. But as you can see that negative divergences were building, what does that mean? Well the fast trigger was not making higher highs versus the first high. So, it implied that we were likely to flatten out and surely we did. You saw Thursday’s daily candle at Friday’s candle last week just moments ago. So, we were not a tailspin we were in a slightly negative move into the end of last week and that carried forward into future trade on Sunday night until what happened People’s Bank of China injected stimulus again about 130 billion worth of US dollars and it picked the market up off of its lows and up up away we went, but what’s important to note here is the strength with which price has risen this week is a lot less than the strength with which price rose last week and embedded in the lower presentation or the lower amplitude of the fast and the core trigger versus last week is a bit of a towel. But this mark gets having a little bit of exhaustion at these highs. Now don’t get me wrong as the market starts off the day if it’s an up move we’re looking for longs but we do still see this market as top-heavy so intraday today what we uniquely found was a moment in time where we could look for a drop back down and play for an inverse trade and that’s what we did in the Active Trader Room once we had seen the peak out happen here and we broke below some core levels. Our super oscillator on the bottom of the screen gave us a core sell signal at around 11:15 -11:20 a.m. Eastern Time and we’re still operating on the basis that that super oscillator takes us down into the bottom quadrant on this regression channel which to us means that more likely downside risk overnight but no break down risk. We see the market below 33:23 then we get a little bit more concerned.

For all of you that are enjoying the free videos I hope that they’re adding to you for all those new students that have joined us we’ve had such an overwhelming positive response of new students joining us from last Tuesday’s presentation on February the 4th. You’ve been enjoying us live in the room paying for the membership fee as you can tell and again we’ve had a couple of profitable days this week between yesterday and today again. For those of you that are looking at joining up we will we’re no longer offering that special deal but perhaps in the near future we will be doing that and we look forward to having you join our group and benefit from the insights and the community overall. I hope you enjoyed this video and we’ll see you in the next one. Bye for now! English

Leave a comment!
Read previous post:
Great Close To The Week With The Negative Divergence Trade