Stimulus Bill Passes – How Do You Trade It?

It’s official – they finally passed the latest $1.9 trillion COVID stimulus bill today, which means the markets will have plenty of reasons for some big moves on Thursday…

But here’s the big question – will this turn out to be a “sell the news” event where the market makers run the market lower, just so they can buy the dip on Friday?  Or will this market jump higher and take off like a rocket ship to the moon? 

It’s anyone’s guess at this point; but no matter what direction, there’s sure to be plenty of opportunity going into Thursday.  Here’s how I’ll be trading it…

E-Mini S&P (ES):

E-Mini Keys to Success:

• Buyers got their snap back to the highs (as expected) but they’re struggling to push higher.  Will need either a strong breakout to confirm higher prices, or a deep pullback to attract more buyers into the market.
• Bulls Want to buy a deep pullback or a 123-breakout
• Bears Want to hold these highs and reverse back to the Weekend Gap below

Best Setups for Tomorrow: 

• [UP] – 123-breakout to buy (or) nested failure to sell
• [DOWN] – seller failure to buy (or) 123-Reversal to sell
• [SIDEWAYS] – sit on hands, wait for a breakout

E-Mini Nasdaq (NQ):

Nasdaq Keys to Success:

• Buyers failed to hold the early morning breakout ands finished the day inside a narrow range.  Expecting a pendulum swing back to the Weekend Gap or a breakout attempt going higher.
• Bulls Want to buy below the range using seller failure patterns
• Bears Want to sell the bounce into resistance overhead or the breakout going lower.

Best Setups for Tomorrow:

• [UP] – 123-breakout to buy (or) nested failure to sell
• [DOWN] – nested failure to buy (or) 123-breakout to sell
• [SIDEWAYS] – sit on hands, wait to buy low, sell high

Gold Futures (GC):

Gold Keys to Success:

• Buyers bought the pullback below the range and our now trying to complete the pendulum swing target overhead, possibly breakout higher.
• Bulls Want to breakout higher to 1739.2
• Bears Want to reverse this momentum back to the Weekend Gap below.

Best Setups for Tomorrow:

• [UP] – 123-breakout to buy (or) nested failure to sell
• [DOWN] – nested failure to buy (or) 123-breakout to sell
• [SIDEWAYS] – sit on hands, wait to buy below the new range.