Daily Plan 4.26.24
Welcome back everyone!
First, we will cover the recap for today's session, then move on to tomorrow's analysis.
Indices:
E-mini and Nasdaq experienced significant sell-offs, reaching the short levels with robust selling activity that aligned with my expectations. Initially, I anticipated that the selling pressure around the short levels would persist; however, prices eventually broke above these levels. This upward trend continued through to the long level, with both indices surpassing the long targets. The session's entire volatility was encapsulated within the range defined by the long and short targets, illustrating the dynamic nature of market movements during the period.
Commodities:
Oil experienced two distinct movements; the first occurred below the short level and successfully reached the short target before rallying an additional 50 pips above the long level.
Gold displayed a strong rally from the long level, setting the high of the day at that point. Prices remained well-supported above the swing Value Area Low (VAL), which was anticipated. This stability above the VAL reflects underlying market expectations and suggests a firm baseline support for gold prices throughout the trading session.
Stocks:
First, I'll discuss Microsoft (MSFT), as we observed two notable moves this week, one beneficial and the other not so much. Today, the price dropped to the Earnings Release (ER) target, setting the day's low before the earnings announcement triggered a sharp rally, nearly 20 handles higher. Although one level was accurate, the updated ER target did not perform well, leading to contracts that will more than likely expire worthless. As I often emphasize, it is crucial to use only a small percentage of your total account when trading earnings because the outcomes are extremely binary—you either achieve a significant hit or watch the entire premium get crushed and finish worthless. Trading is fundamentally about staying in the game, so using a high percentage of your account with 50% odds will likely lead to depletion over time. The issue is that many traders, having secured a large return, invest most of that gain into the next earnings release, only to see it evaporate as they overestimate the potential profits. It is imperative to avoid this mindset. I assume many of our subscribers might think this way since our ER calls have been successful over 50% of the time. At the start of the year, we were achieving nearly 70% accuracy on ER predictions, so it's crucial not to let this success alter your approach to managing your account.
Moving on to other stocks, there was significant selling overnight and into the market open, but generally, the market rebounded, reversing these moves. The charts below illustrate the strength observed, which emerged right after we broke through the long levels, triggering substantial upward movements..
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