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Peter’s Premarket Perspective – Wednesday August 14, 2019

Peter Reznicek
Peter Reznicek
Co-founder/Head Trader, Peter's Premarket Perspective, Weekly Options advisory Email Peter Reznicek
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  Key Levels for Today
2886.00 ONL
2917.25 Top of Single Prints
2910.00 Halfback
2872.50 8/12 pullback low
2856.25 VPOC (8/7)

 

I am wondering (out loud) if yesterday’s tariff delay rally will be remembered as the bull market’s last gasp to suck in the last of the short term traders who initiate new longs according to the news of the day. Given that as of last night we now we have an official 2/10 yield curve inversion that might just be the case. Remember that this is a recession indicator that has not been wrong in over 50 years.

All that is well and good but we need to concern ourselves with how to profit from it in the here and now, meaning TODAY. That’s where I come in! Let’s break it down piece by piece. Whenever analyzing the market, break it up into multiple data points, thereby decreasing the amount of emotion that is often brought to the equation by price alone.

–The gap is monstrous but not a true gap as yesterday’s range was very large.
–We are currently gapping down into an extremely large set of single prints which should not be resistant on any retracement higher.
Overnight inventory is close to 100% net short. This is important because we will gauge any early activity against this context. We know that at least some short covering should ensue. How much, if any, will be a huge piece of M.G.I. that you will utilize in today’s trade.

Focus on these three points early today and you will understand the market’s activity better and probably make a better trade.

While I never trade news or fundamentals, I do always take into account how strong or weak I believe the news signal to be. My take on the curve inversion is that it is a strong signal. I am coupling that with the fact that I know that yesterday’s buyers were very emotional and probably not thinking straight. They’ll be reversing a lot of that today. Therefore, although I would never short a market blindly at the open, I’m coming in with the framework that any counter trend corrective activity could be sold. That being said, I will of course need internals and tempo to confirm that. Given that there is no upside reference until the top of the single prints which is very far away, know that you may have to use a pattern reversal or TPO reference as an entry. Pay attention to halfback as that could also be important today.

  Scenarios

  • I will be watching any overnight inventory correction closely today looking for a short play that would target the 8/12 low and beyond that the VPOC of 8/7, both of which are Key Levels for today. Only acceptance above halfback on bullish internals would have me thinking that there is potential to switch my intraday bias to long.

 

Have a profitable day,
Peter

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