Yesterday, due to the market consolidating and not going anywhere, I started to question the validity of a bearish trade. That’s why I started exit the bearish trade yesterday at 2049ES and finalized the exit this morning on break of 2058ES.
I then bought Nasdaq (NQ) futures at 4405 –for a 40 point gain as we closed above 4445. I bought the Nasdaq — because as I’ve been saying all along — the ending diagonal pattern in the 5th wave position of Nasdaq is clearest to me — plus the support just below 4300 is also clearest. Whereas the S&P is a bit more unclear.
Technically, I sold at 4435.5 and rebought at 4432 — so slightly more than 40 points. Trade is still on, but so far locked in 35 of those points for $700 — offsetting losses from the bearish trade. Each point in the NQ futures = $20, so 35 points = 35 * 20 = $700.
This is why it’s important to not to fall in love with one direction. Once market gives clear signal via price action — need to be nimble and be able to change direction quickly to turn a loser into a winner –rather than make a loser even bigger.
Note that the 4443 region is the region from which we dropped in the initial ending diagonal at the end of April down to May 6’s 4280 low.