weekend ed

The NQ Cracked 30,000 and I Quit Looking for the Bottom

by Tony Rago

Hey trader,

Friday morning the NQ printed a number I had not seen in a while. We were trading under 30,000.

This was not a quick wick under and back. Volume-weighted average price was sitting below the line.

The bars were still pushing lower. We were under 30,000 in a meaningful way for the first time in a while.

I told the room something I say almost every Friday. Trends rarely reverse on a Friday.

There is an old saying that rides along with it. Tops and bottoms are rarely found on a Friday.

Put those two ideas together and you get a clean rule for the last session of the week. Whatever direction the week is running, it usually keeps running into the close.

Friday is not the day the market hands you the turn.

The Two Trends That Were Fighting

Plenty of the room got tangled up early because they were reading the wrong chart. They were looking at the daily.

On the daily, the big picture is still up. The monthly is up.

The longer timeframe still says buy dips. On a normal week, that read is fine.

This was not a normal week.

I asked the room what the trend for the week actually was. We flipped.

We were carving lower highs and lower lows all week. By Friday we had cracked 30,000 and kept going.

The daily structure still pointed higher. The week had turned over.

When those two disagree on a Friday, I trade the week.

For weeks before this one, the picture was the opposite. We came into every Friday with the week pointed up.

All anyone had to do was buy the dip. That is exactly what the tape did, over and over.

This Friday the dip buyers showed up again at the open. The market told them no.

The bears showed up and ran them out.

When You Trade With the Week, You Get Paid Fast

The cleanest tell that a trend is real is how quickly your trades pay. I shorted the 77 back through from 82.

We were filled and green almost immediately. We booked a plus 20 on it.

The same move paid a full 31 for the traders who held the runner. Taylor grabbed it. Jack grabbed it.

I said it to the room while it was still happening. You know it is trending down when you get paid that quickly on your trades in that direction.

That speed is information. A trade that pays in seconds is swimming with the current.

A trade that grinds, stalls, and makes you sweat for every handle is usually fighting it.

We did have a 26 long that worked early, but you had to be all over it. It paid immediately and it was gone before most people could react.

The shorts were the trades that kept paying as the day wore on.

The Trades I Refused to Take

A trend down day does not mean you fire shorts at anything that moves. Two mistakes will hurt you.

The first is shorting from too high above and expecting price to keep falling. I told the room that straight.

It is a challenge shorting from high above and expecting it to continue lower. The market can bounce 100 handles off a low and take your stop on the way back up.

The second is the counter-trend trade.

Late in the session the only setups left were a short of the 26 from below or a long of the 77 as a new low on the day. Both of those are counter-trend on a week that is pointed down.

I flagged them as counter-trend out loud before anyone could get tempted. On a Friday, in a down week, those are the trades I leave on the table.

This is also why I treat Friday differently than any other day. Capital preservation is top of mind.

More than any other session of the week, Friday is the one where I protect what I built earlier. I would rather walk away green and small than give back a good week chasing one more handle into the close.

That is exactly how I called it at the end. The tape was getting dangerous and slippery.

It was trend down. It was not giving us clean shorts anymore.

I told the room the truth. I do not short the lows.

I do not want to counter-trend trade. It is Friday.

If you are up a little on your money, keep it. Do not give it back.

How to Read It Monday Morning

You can put this to work without any tool you do not already have. Before the open, pull up two charts.

Look at the daily for the big-picture trend. Then look at the week.

Check whether you are making higher highs and higher lows or lower highs and lower lows over the last several sessions. That answer is your bias for the day.

When the day and the week agree, the trade is easy. You press in the direction both are pointing.

When they disagree, you lean on the shorter read into a Friday. The week tends to carry through the final session.

If the week is down the way it was Friday, you take the shorts that come from your levels and pay fast. You skip the longs that ask you to call the bottom.

You keep your size honest because the ATR runs hot in a falling tape. You protect your capital into the weekend.

Coming Into Monday

Trends rarely reverse on a Friday. They also rarely reverse over a weekend just because the calendar flipped.

The NQ closed the week under 30,000 with lower highs and lower lows behind it. Until the tape proves otherwise, that is the trend I am respecting Monday morning.

The big picture is still up. I have not forgotten that.

The dip buyers may step back in, convert a level, and turn the week green again. When that happens, I will read it off the chart and trade it.

I will not guess at it before it prints.

Show up Monday and read the week before you read the day. Trade with the direction that is paying you fast.

Leave the counter-trend hero trades for someone else. 

If you want the exact levels I trade these reads off of, they are built into the Golden Setup.

See you in the room Monday.

Trade smart,

Tony Rago
Creator of the Golden Setup