You can see the SMT divergence here versus the Nasdaq's higher low, and I elected to trade the NASDAQ today. The reason why is because it was respecting its daily inefficiency. So it went down, respected this, rallied up. The body stayed inside the inefficiency, the wick went outside of it, and we broke down. You'll see there's a breaker in here when we get in lower time frames, and the sell-side was obvious as it runs there. Then it went to the bullish breaker, as just mentioned, and then after, raced to the upside.
S&P500 had a little bit weaker market structure. It wasn't as clear, and it wasn't in as much of a premium as the NASDAQ did reach. So we had the high of that daily inefficiency reached on the NASDAQ, but we did not see it here. All the while, it did go to the C.E. We're seeing that respect. Look at the bodies of C.E. Now, which one went higher inside their respective daily SIBI? Did the S&P go to the high end of its range? No, but the NASDAQ did. So NQ is the better short, because it has a higher Premium.
We are looking for the asset that is showing the respect of the signatures and price action. We’d like to say this is the better short because it's higher in terms of its daily inefficiency versus the midpoint here. Both are going to sell off likely, yes, but I want to be in the one that has the higher Premium at the time. Even though the S&P makes a lower low and it has the lower low for the SMT, We don't care about that. We’re aiming for the SSL. Look at the bodies! They tell you which one to trade.
If we get back below the consequent encroachment of the Nasdaq's daily inefficiency here, we will resume being bearish. Right now, it's consolidation to modestly bullish on an intraday basis. But we are waiting for the evidence that we're going to see a longer-term short on the daily chart. So those types of trades are swing trading models. They take a little bit of time to develop, and they can have a series of up-close candles form before the actual setup forms for a longer-term macro short.
