Messy Start to the Week & A Lesson on Losses

S&P sits in critical level.

Technical Edge — 

• NYSE Breadth: 32% Upside Volume 

• Advance/Decline: 28% Advance 

• VIX: ~$23

Breadth did not confirm it, but yesterday was a messy, messy session. Stocks took it on the chin even as rates fell and the dollar only climbed modestly. At one point though, the dollar was down and stocks still couldn’t fetch a bid. 

I was on the wrong side and I took 3 straight losses yesterday, which is unusual. I have a trading rule that says if I take three straight, it’s into the penalty box for me — AKA done trading for the day. 

Some days are like that. We combat those defeats by keeping our position sizes small. It protects our account, but just as importantly, it protects our mental capital as well. Yes, it sucks, but that’s trading and those days happen. You need to have safeguards built into your plan to account for days/stretches like that. 

S&P 500 — ES 

The ES is back under pressure this morning. I like that it’s holding 3920. That’s a key pivot. 

But I don’t like how it effortlessly cut through the 10-day and 21-day moving averages or how it’s getting stuck below last week’s low at 3941. 

Bulls need to reclaim that low. Otherwise, I can’t rule out the 50-day near 3835 or the 50% retrace at 3806. 

On the upside, I expect resistance at 3980. That’s if the ES can clear 3955. 

SPY — Daily