ES Journal - 2017/2018

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The most trade activity in the last 50 days took place at 2726.50

Last 50 Days.PNG
 
Looks like the semis (SMH) broke today, so the FAANG is the only firewall left holding equities afloat. If you are going to play a swing break to retest the lows, might consider NQ vs. ES. ES is -160ish to retest lows ($8,000 notional), whereas the NQ will play catchup and shed -750 points to retest lows ($15,000 notional).

A 10% across the board average drop in the FAANG will cause the -750 NQ drop with a 20% FAANG drop creating a -1,500 NQ fall. 5 stocks holding the key to deciding whether so much equity value disappears or not, brilliant effing idea!

Not saying it will happen, but there is historic potential on the downside given the amount of money "entrusted" to automated trading and smarter than humans "AI". The historic part isn't a 20% decline, but how fast it might occur.

If the train wreck gets started, the humans will need to step in and pull the plug on the automation to stop it. A lot of these jokers that built the automation trading systems have never had to stare ruin baring down on them, so who knows how they will react when it happens. Best of luck to everyone!
 
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FAANG stocks make up 42% of the Nasdaq 100 weighting. Below is an image of a custom FAANG index vs NQ with a standard BB.

Note: When the NQ extends beyond its bands but its evil overlords (FAANG) are not participating the NQ's leash gets yanked on. Nice RTM fade trade!

FAANG VS NQ.PNG
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MidwesternTrader said:
Not saying it will happen, but there is historic potential on the downside given the amount of money "entrusted" to automated trading and smarter than humans "AI". The historic part isn't a 20% decline, but how fast it might occur.
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?? You write about it as if everyone is asleep at the wheel. That’s not how it works. It’s also pretty easy to program throttling.
 
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