Buy The Rumor, Sell The News, And A Rally Built On Thin Air.

Morning traders. Let’s focus just on the main stock indexes today.

The markets go up and the markets go down, its when markets do those things to extremes with nothing fundamentally changing, short term this creates price extremes, and typically when something weird happens prior to known news events, post news you’d expect the opposite to happen. This is where the accurate phrase, buy the rumor sell the news, comes from. The pre news moves are the bigger players who can genuinely move the market performing risk on or off to position themselves ahead of a possible market moving event, often this is an over reaction and then a course correction is needed post news which often sends price back the other way.

So I’m wondering if this recent rally was caused by hot wind and thin air. Fugazi if you will.

Market Snapshot

Just the main stock indexes today, all four are pausing ahead of the NFP release.

• ES (SPX): 7,741.00 / +0.12% / pausing ahead of the news, full read below

• YM (Uncle Dow): 53,963 / -0.03% / off the highs, pausing with the rest

• NQ (NazQuack): 29,583.75 / +0.27% / holding inside its range

• RTY (Uncle Russ): 3,007.70 / +0.04% / a mite clearer, full read below

SPX: The Pinch Before The News

SPX is pausing ahead of the news as anticipated and on the first chart you can see the Bollinger bands pinching with the bandwidth as narrow as its been in the last 120 or so bars and with the ATR for the last day or two being 30-50 points after the 50-70 and that 100 pointer we saw just the other day this is most definitely a contraction in price ahead of the news, which is good to see, as the post news move could suggest some explosive action.

There is a bull TnT that has developed which I suggested to my community members to pause and wait, not normal practice as I do like to follow the setups as they develop where possible, but given the weird price moves skittish behavior sudden price extremes it behooves me to keep pause and I’ve not traded the swings all week anyway so what is one more day going to do?

The intraday Poppers are pulling the premiums so not missing out at all. PopPop.

The pinch before the news. Explosive action could follow.

Uncle Russ: A Small Bear, Taken

RUT is a mite clearer and taking my own advice to not make a habit of going off piste, the Tag n Turn did develop with a low quality warning but now that we are out of the MACD-v extreme that can be considered and the pulse bar when %R hit the bear extreme might suggest some further down movement along with the tiny little peekaboo and immediate u-turn from the NATH, a small bear position has been taken.

Out of the extreme. A small bear, taken.

Premium Poppers: Another Bag Full, And Richard’s First Bullseye

Which brings me to yesterday’s Premium Poppers, and another bag full of premiums were once again collected by the community.

SPX bull with a small loss and flipped to a bear. Richard landed his first bullseye right in the profit tent, almost right on top of the 7710 short strike for max gain. Bro.

RUT bull break locked some profits in, for me as price ranged to the 2 day VWAP there was a slightly lower profit for me so I locked that in as I was a little late on my entry.

After then, I had a little VWAP fun. V-entry off the VWAP for the bear, there is a 2 day VWAP retest if that was missed. Then the current day VWAP gets flopped, and lastly was a little speculative, I was just looking to land a pin close to the then low of the day but as you can see price decided to trend a little more through the afternoon.

And of course the community landed the premiums again too. Well done team.

PopPop.

Another bag full. Richard’s first bullseye.

The Community Landed The Premiums Again

Don closed the RUT Bull BO for 50%. Chris had a tough day to swallow, his 1st BO on RUT never got near enough to take the profit off the table, then he went again with one last shot at a hero day, an SPX transformer with a bit of profit locked in on it. James called it a bit of a weird day, skipped the first bull SPX LP and took the bear breakout, but only on XSP as it looked dodgy, set to 60% and it came in a winner, small but a winner. RJ got out of his SPX at about 65%. And Richard had the super exciting close, the transformer butterfly lottery ticket, closed 7711.37 on his 7710. Boom, right at the profit tent.

Trade well,

T2 Markets

p.s. Want full access to the SPX Income System (includes 7+ mechanical income strategies)? Join our team now!