Good Morning Traders!
End of the quarter went out with a healthy markup in the small cap indexes. 1164.70 was the previous 12-0 minute swing high. The Russell closed with healthy markup in the last 5 minutes. Tuesday will tell the real tale as to whether it now holds the upside breakout point or drops back below. If it holds and trades above Monday’s high, the DOW is just over 100 points from all time new highs. A tempting target at some point still. Yellen’s comments about continued FED help ad infinitum gave a brief short covering rally to the bonds off their lows. However, the yield chart as posted above shows that both the daily and the weekly charts have found support (resistance in the bonds) and the daily osc. can continue to swing in the opposite direction. Additionally, the short end of the curve was unable to muster much of a bounce at all and has been forming daily bear flags as shown by the chart of the five year notes. Lastly, the Yen made new momentum lows on its downside followthrough (see 2-period ROC). Any reaction up will form 120/240 minute grail sales.
The $ index has quite a bit of price bar overlap the past two weeks. Despite its upside short covering rally 2 weeks ago, it has failed to put together any further gains…..so far that is. Jus t a good chart formation to keep an eye on for a test of either the 7 day highs or the 7 day lows.
The relative strength leader for the last day of the quarter was beans off the crop report. Mick pointed out the widening of the spread between old crop and new crop.
Our new scalp trade added to Second Quarter’s program is a mean reversion scalp after 2-3 days high to low or low to high using 5 minute buy/sell divergence between 7 – 10 AM CST. This is a scalp only but excellent liquidity has been coming in at these points. The Yen has one Monday morning that led to a 50 tick squeeze. There seem to be 7-8 of these a week. They are scalp trades only but the risk reward is favorable to do on decent size. Will keep you posted!
As always, research, trading, ideas, and continual work on good habits never stops.
I just read a good book on the airplane: The Power of Habit – by Charlesl Duhigg. In a nutshell, habits can not be eradicated but they can be replaced. For a habit to change, you must believe that change is possible. And, to take it one step further, if you believe that there is a higher power in life, this can be the critical ingredient to ensuring that your changed habits or routines do not revert backwards when times get stressful, as they do so often in the markets.
I recommend this book. And, wishing everyone a good start to second quarter!