Daily Plan Jan 13 '22

Darkness lies an inch ahead

Traders-

Today was a giant nothing burger. The session frustrated both on the bull side as well on the bearish side, with only the scalpers and the balance-traders going home happy.

Most of the market was anticipating a shock and awe CPI number that in my opinion turned out to be rather tepid. Most of the day the market spend balancing with no clear trend in sight.

If you had the right levels and had them at the right time, you did not get whipsawed (hopefully! ) .

On my part, I said yesterday if we opened above 4717 we going to test 4740/4750 and I do not wanna step in front of it. This turned out to be reasonable thing to do as we traded 4740 shortly after open (we opened above 4717).

See this link to the trade plan: Trade Plan by Tic 1/12

I reinforced this with my CPI scenarios: 3 KEY CPI scenarios

Last but not the least, after the CPI number was out, I restated how important 4717 was- which was support in the morning and became the resistance rest of the day, offering not one, but multiple opportunities for the active punter. I said this both on my Telegram and Twitter. BTW if you have not already, join my Telegram and turn on the notifications. While my Twitter often gets noisy as I get distracted at times, my Telegram is clean, all market stuff 100%.

Personally, I myself was prepared for either a very weak CPI or a strong one , I was personally not in a mindset for trading an “as expected “ CPI reading. The number came in at 7, which BTW still very high from historical perspective , was not high or low enough to cause massive dislocation of price.

The market opened at 4725. I had outlined 4717 as a key level. I thought if we offered or opened below this, we will trade back into 4689. I was right to an extent- where the S&P500 emini flirted with 4717 in first hour , could not break it, bounced about 20 points higher. On a second attempt, it managed to break it, traded down into overnight lows around 4695 BUT could not go any lower. It was chop fest there on! I traded mostly on short side today - but was challenged on a couple of occasions as we rallied hard from the lows.

My expectation for next few sessions:

I have not been a major believer in this rally - as evident by my recent posts- but I have been wanting some kind of orderflow confirmation in form of a Daily close below 4660 to get the bear bets going in earnest. That bias does not change- I do not personally believe the volatility in current market is over. However, until I get a solid technical confirmation, it is playing it both ways with intraday trades.

Next few sessions, while not outright bearish, I expect more balanced trading conditions. While a lot of folks are very bullish (5000!) and some are very bearish (the end of world types), I am not in either camp yet. I think there may be more balanced conditions at play at the moment.