MES MICROS TRADE PLAN 709
Opening Remarks
In today’s February 4th AM Briefing, Micros Trader outlines a market that appears to be transitioning after a period of heightened volatility. Several indices show strength, but the Nasdaq (NQ) stands out as a persistent weak link. It remains below critical historical levels, including its 2026 open, and is sitting at the bottom of the prior day’s range—signaling a potential divergence from the broader market recovery.
Micros Trader emphasizes that the market is currently trading in the middle of the Regular Trading Hours (RTH) range. This “in-balance” area is considered a poor location for initiating new positions, as it lacks directional conviction and tends to result in chop and whipsaw.
Market Context and Economic Indicators
The economic calendar for the day includes a few notable entries. The ADP Non-Farm Employment report has already been released and is noted as a non-government data point. Government employment numbers are not expected this week.
The ISM Services PMI is scheduled to be released 30 minutes after the open and is expected to provide further directional clues. Traders are also watching Google earnings, which will be released after the close. Given the tech sector’s sensitivity to these announcements, this could lead to significant extended-hours volatility.
Technical Positioning
Micros Trader highlights that despite the mid-range market position, there are signs of bullish resilience. Specifically, ES has reclaimed around 50% of the previous day’s losses, a positive sign for the bulls. However, the "in-balance" posture remains a deterrent to new trades.
The Dow and the Russell are both in the upper distribution, with upward-sloping Volume Weighted Average Prices (VWAP), indicating strength. ES also shows an upward bias but remains in a more neutral position compared to the others.
On the other hand, NQ is labeled the “weak link.” It is underperforming, sitting under the 2026 open and closer to last week’s lows. There’s no clear catalyst identified to lift NQ out of this relative weakness at this time.
Comparative Indices Analysis
Micros Trader breaks down the different behaviors of the indices:
- Dow and Russell: Both are showing strength, maintaining their upper distribution and positive VWAP slope.
- ES (S&P 500 Futures): Hovering at the "halfback" level from the prior session’s decline. VWAP is angled higher.
- NQ (Nasdaq Futures): This index remains the underperformer. It's trading under the opening print for the year and has yet to show signs of meaningful recovery.
This divergence is a key theme, suggesting that while the broader market holds up, the tech-heavy Nasdaq is vulnerable and requires special caution in trade planning.
Strategic Trading and Execution
Micros Trader shares that the overnight session activated a “Battle Plan” long around 1:00 AM, which moved cleanly up to the Point of Control (POC), netting a 13-point gain. This was based on targeting specific recovery zones laid out in advance.
A previous long at the 6,900 level is cited as a “greedy entry” that worked well. That entry capitalized on oversold conditions and reached its target, demonstrating the effectiveness of zone-based entries paired with level reclaims.
Micros Trader references a recent “vomit day” where aggressive selling flushed the market lower. Traders who survived that session are now seeing cleaner setups. These sharp sell-offs often reset the market and create clean directional edges.
“Battle Plan 3” is discussed as having played out recently, hitting its expected bounce target. The strategy here involves identifying zones of confluence, waiting for price to reclaim structure, and then entering with confirmation—not before.
Risk Management: The "Laddering" Principle
A large portion of the briefing is dedicated to trade management and the psychological pitfalls of staying in a bad trade. The concept of “laddering” is defined as the act of allowing the market to progressively go against you while maintaining a position.
Micros Trader provides several actionable rules:
- If a trade returns to break even, that’s a gift—exit. Don’t wait for it to go negative again.
- If the trade makes a new low (even just one tick below the prior low), the thesis is invalidated—exit immediately.
- Do not average into counter-trend positions on strong-trend days. This is how many traders blow up.
- Maintain emotional neutrality. Don’t fall in love with the idea that a bounce “should” happen.
Micros Trader encourages traders to “take the L,” reset, and come back to the charts with a fresh, unbiased view. Getting stuck in hope mode leads to laddering and larger losses.
Conclusion
Micros Trader closes the briefing by reinforcing that this is a patience day. The market being in the middle of the range means setups will require more precision and discipline.
NQ’s continued weakness should serve as a warning sign—until it participates in the bounce, the market’s strength remains uneven. The best path forward is strict adherence to “Battle Plan” zones, confirmation-based entries, and absolute commitment to immediate exits when trades are invalidated.
Frequently Asked Questions
What is the "Laddering" principle in trading?
Laddering refers to a situation where a trader allows a losing position to remain open while the market creates a sequence of lower lows or higher highs against them. The briefing emphasizes exiting immediately when a thesis is invalidated to prevent compounding losses.
Why is the Nasdaq (NQ) considered the "weak link"?
The Nasdaq is identified as the weak link because it is currently trading under the 2026 opening price and remains at the bottom of the previous day's range, unlike the Dow or S&P 500 which show more resilience.
What are the key economic catalysts for the February 4th session?
The key catalysts include the ADP non-farm employment change, the ISM Services PMI (released 30 minutes after the open), and Google's corporate earnings report after the market close.
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