Divergence between ES and NQ and how day traders can take advantage of it.

The S&P is acting like they want to re-test the lows of the year while the Nasdaq is acting like they want to make new highs. 

How can you take advantage of this if you are a day trader?

I key in on the Nasdaq because they are more dominant in their direction.  If the Nasdaq remains strong (by sustaining trade above their 200 day m.a.) then I am more aggressive when I am buying the S&P.  If the Nasdaq is below their 200 day m.a. then I am more aggressive with my selling (until the Nasdaq gets to their next area of support).

An aware trader sees that the Nasdaq is stronger than the S&P and applies that knowledge to their execution.

I know to be a cautious seller of the S&P when the Nasdaq is making intraday highs.  Also notice if the S&P continues to make intraday lows and the Nasdaq does not; I am then ready to cover my shorts or possibly reverse and get long. If the Nasdaq starts to fail at support then I am more aggressive with my selling in the S&P because they are already weak and a weak Nasdaq will only add grease to the fire.

Something else to remember about the upside leader of the market; they usually go through resistance with ease and a lot of times they come up short of support. 

This is how I adapt to the conditions of the market.  Remember that every strategy is supposed to create a return on your investment but the executor of that strategy has the ability to greatly increase that return.  Be patient and watch what is going on in other markets when you are executing your strategy.

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