After the Crash

Outlook 02/06: Following steep losses throughout the night, U.S. stock index futures are see-sawing between positive and negative territory, while the global selloff continues in Europe and Asia. The SP500 erased its gains for the year.

/ES Value: YVAH 2763 YPOC 2740 YVAL 2680

/ES Plan: Yesterday closed bearish after the worst single-day losses for the market since 2011. Overnight is multimodal moving below Yesterday's value, so we've these options:

A) If market remains above edge 2586 with bullish internals, try to be a buyer leaning on 2586-2595 towards GAP 2607.50 LVN 2619 ONH 2644.50 and GBT 2680. 'Look above and fail' is a signal of weakness.

B) If market starts to move below edge 2586 with bearish internals, try to be a seller leaning on 2586-2576 towards edge 2541 ONL 2529 GAP 2516.75 and edge 2507. 'Look below and fail' is a signal of strength.

Tips: On high volatility days like these, your first trading rule is 'manage your risk'. Regardless of how much more money you could have made, you do realize that you just can not manage risk on this enviroment. As example, taking a short position, getting filled 5 points lower than expected and seeing a 10 point up tick in prices within a minute. If you look at standard 3 minute bar note how many of them had 20 point ranges. Imagine taking a 20 point stop out and seeing the market move 30 points in your direction. The risk is just too great. When volatility rises this much and you see a thin order book (2 digits), I strongly recommend to stay aside. Don't panic, be patient. The markets should stabilize over the next 3-4 days and recover a 'normal' tradable regime.

Today's Economic Calendar

10:00 Job Openings and Labor Turnover Survey
01:00 PM 3-Year Note Auction

Disclaimer: All information on this outlook is for educational purposes only and is not intended to provide financial advice.

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