With my newly-found hobby of AI art using Stable Diffusion, I created the image of the Buffalo Trader discussing the bear side of the MNQM24 contract with another futures trader, who (at least in this image) seems just a little miffed. The discussion is about the potential for the “sky falling” and the extent of the fall, if any.
I may have the horns, but that trader may like bison chili and just might be packing :D (just kidding).
To save time, here are the outlines of the video:
0:00 - 3:18 Introduction
3:18 - 5:19 Step 1
5:19 - 6:10 Step 2
6:10 - 7:05 Step 3
7:05 - 8:49 Step 4
8:49 - 9:46 Step 5
9:46 - 13:53 Step 6 and Summary
PLEASE WATCH THE VIDEO. What I want to emphasize is that price supports have wide gaps in them, largely because of the seemingly endless (and potentially fraudulent) government data showing that the economy could withstand multiple rate cuts.
Even when data shows that many new jobs are temporary jobs (meaning the same person might be holding two or three of them), one Fed governor (Neel Kashkari) seems to be giving Gestalt therapy to the institutional, mutual fund, or individual investor or trader regarding the reality that inflation is still holding onto this economy, this market still attempts to press higher, but that may not last forever. Rates may have to remain elevated for some time, or the reality of higher than historical inflation ( at least since 1913 ) could be here today if Federal spending remains rampant and the money printing to pay for it all keeps going.
What each one of these steps on the weekly chart represents is the ease at which MNQM24 could decline if the environment becomes bearish for bonds and eventually, as a result of rates potentially going higher, bearish for stocks too.
Here are the key support levels, which are explained in the video.
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:
Step 6:
If you have a question about any of the steps, go to the section in the video that represents it. You are either going to price structure support, volume-weighted average price control point ( or VWAP line support), or Fibonacci resistance level support along the way. The gaps are so wide because one or two economic reports in a given week provided “evidence” supporting rate cuts, assuming the data from the U.S. Treasury, the Federal Reserve, or BLS was honest (which it might not be).
Big cracks in commercial real estate are already out there. like in St. Louis or even Nashville, and that spells trouble for regional banks. The emergency reserve for the buyer of last resort, the reverse repo market, continues to dry up, and when it does, rates will go higher as demand softens for U.S. Treasuries domestically and worldwide. Even Mr. Sunshine, Mohamed A. El-Arian, sees the writing on the wall. We have no clue what will happen as this video from Game of Trades offers up. This could be a temporary spike in inflation or the beginning of the hyper-inflationary round as numbers at the base level have not been seen since the founding of the Federal Reserve.
I am agnostic as I can be long or short and make money either way. I just think everyone needs to be aware of the opportunities to the upside and to the downside, which I have provided you estimates for these last two weeks. If you have questions or comments, leave them in the comments and I will respond to them.
The Buffalo Traders Writing Desk may become a bi-monthly or monthly Substack as time wears on. I need to establish a web presence for my real estate business and that will take top priority for a while, but I am still trading, and I think this Substack can add value to traders for MNQM23 and other markets.
Thank you for your continuing support of the Buffalo Trader’s Writing Desk!
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