Well today was one wild day that’s for sure. From the $3 green candle at 10am in less than one minute to the followed up $4 drop over 2 hours this day was full of volatility and extreme hard technical to trade. I actually only made four scalps today which is extreme low for me considering most days I make 8-10. However, with the movement of SPY, Tesla and Apple today I was able to make some successful level to level plays. Thankfully even when stocks are moving irrationally they still have a way of respecting the overall TA and key levels.
I have had a LOT of questions about what a “level to level” play is so im going to post an example of what I call out and then I will explain what it is and why I play it to clear up the confusion. I have started to play a lot more of these as the charts respect the technical better and this allows everyone to get in on the play when its hard for everyone to eat on scalps. Also theta has been eating extra good lately and after the first 15minutes we have had such choppy movements but have been making larger overall plays that a longer dte from level to level has been able to overcome those negatives.
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Okay this morning at open I called out this play on Tesla. You can see in the below picture that was the daily chart. What I had seen that despite MSFT and GOOG missing and dumping and even SPY was very red at open we had a pretty bullish open. We had held over 215 support overnight and we had held the daily 8ema support at open. This was a sign of bullishness and the 15min chart was looking bullish along with the DMI stoch. We were at a key level having broken over 223 resistance at the time of call out.
The way a LEVEL TO LEVEL play as I call it works is that we are finding a major resistance that was turned into support. So Tesla had broken through previous 223 resistance. We now look for the next major resistance which at the time would have been 230 followed by 234. This will be our take profit target. We then look for a key support that if that breaks would signal down side. The trick to this it to find a soft enough support that you aren’t stopping out too soon (this is why I didn’t chose 223 because a back test could have occurred) but we are not having such a far away support that by time it hits our position is extreme red. We are eyeing a support and also a DTE that gives us room to be right and win but also gives us room to be wrong and avoid theta without ending up overly red.
I played this breakout with a 2dte call for 50% then followed it up with a 30% 2dte win and a 9dte 26% win using this. The 2dtes went on to well over 100% and the 9dte hit 50% plus when I had looked before it reached my target of 230.
Now you noticed my target was 230 however I had sold early when it had stopped at an intraday resistance. The key here is that while we fully expect it to hit the take profit once we have secured a large enough profit and the overall momentum appears to have slowed down we take profits and secure our win. This is not a diamond hand be greedy play. Essentially we are playing a longer DTE and bigger move from level to level (or support to resistance/ resistance to support). Hope that explains that better!
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https://preview.redd.it/sriqbh5m68w91.png?width=975&format=png&auto=webp&s=48078874afaf12dd694dffb79a5b62516666b1d0
Key support- 381.6 -> 378.9 -> 378 -> 374.3
Key resistance- 385 -> 388.6 -> 390.1
I am bearish short term on Spy. I had mentioned last week and this week that my initial thoughts if we broke through 378.2 was that we could touch that 388.5 to 390 range. We fell just short of that today. With the massive green candle being put in followed by this impressive gravestone doji with this really tight rising wedge inside the red bear channel I am expecting a retrace and retest of support down near 378.2 to 378.8 tomorrow. Now I am not sure if that support will hold or if we are going to see a drill. With MSFT, GOOG and now META getting wrecked on earnings really everything relies on Apple…. And let me tell you APPLE got wrecked intraday today relatively speaking.
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https://preview.redd.it/m8vo4ipm68w91.png?width=975&format=png&auto=webp&s=6f5c2338cf936f05d3078fded0dc6a483c555d14
Something else to keep in mind for tomorrow is that GDP and jobs release at 830am. Overall today if you noticed that huge red dump that came out of no where it was directly correlated to the time the Atlanta Fed updated its GDP forecast to be even higher then expected. Wait but why is a good GDP bad? Well in the simplest of terms if the GDP is good that means the economy is still strong and means we are out of the technical recession that we were never technically in (lol yeah it be like that). So this means the FED could realistically be even more hawkish thinking inflation is not going to slow enough.
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https://preview.redd.it/ncrnug5n68w91.png?width=975&format=png&auto=webp&s=bf95fba0118ebdf0005446324132cf850c708848
Here is a little excerpt to kinda help explain it.
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https://preview.redd.it/0bowchjn68w91.png?width=975&format=png&auto=webp&s=a2c39316cd1e6b2cdd678135245fa4cb5de0f3b7
You know those little maps that say “you are here” when you are lost at the mall? Well this is your guide right here on futures. I believe we could be seeing a similar movement, rejection with a doji followed by a sell off (data/ macro driven) after a bear market rally just like we saw back in the first week of October.
As you can see on Futures we are in a similar rising wedge pattern inside of a bull channel that should result in a pullback. Important think to note is that Futures attempted to break through that blue dotted bear channel resistance (this is the resistance that dates back to the august 4300 peak… apple and spy have broken theirs but futures have not). I actually had an upside target today of 3925 and we looked like we were going to fully test that bear channel resistance but were smacked down hard by that GDP news and never was able to recover… its almost like markets for the last week have forgotten the full macro bear picture and were promptly reminded today.
Key support- 3840 -> 3805 -> 3770
Key resistance- 3875 -> 3925
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https://preview.redd.it/khdd3q1o68w91.png?width=975&format=png&auto=webp&s=294783afc532d3880c7fbea998d610a3294c2acc
That rising wedge I reference on SPY and futures today well Apple had that formed already and we saw that support fail today. With that support failing today we are going to be looking for a true test of this red bull channel support tomorrow. This will also bring a test of the daily 8ema and possibly the daily 20ema. With earnings reporting tomorrow night after hours we should see the sentiment be priced in during the day tomorrow. Todays price action on Apple looked like someone knew something and that something wasn’t very bullish…
With MSFT, GOOG, and META now all missing… technically Tesla beat but missed revenue… its really left up to Apple and Amazon tomorrow. Apple has put the market on its back once before… But overall I would be shocked to see Amazon beat. I really don’t know if Apple does or not. My thoughts are they have had a lot of slow downs and stuff but im not sure if we see the total effect this quarter or next quarter.
Key support- 149.3 -> 147.3 -> 145.5
Key resistance- 150.9 -> 152.4
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https://preview.redd.it/fo4v4uko68w91.png?width=975&format=png&auto=webp&s=cae8d6b2d072cf760081166a815be378b969eb3a
Who loves a busy chart? Lol well lets take a look here lots to breakdown on Tesla today… So we actually broke out of the red/ blue diamond. This means I would expect further upside from Tesla. However, as you can see we hard rejected the daily 20ema on the breakout today. Usually the 20ema is about the last resort before we see a bearish move. Its either breakout or breakdown at the daily 20ema. However, we are holding the daily 8ema and we are also see a pretty intense black rising wedge and there is actually another rising wedge formed with the red bull channel and the black 3 day support line.
Overall unless Tesla open over 225 tomorrow we break through support of this rising wedge and that should open up some downside. If we open under 225 tomorrow I will be looking for a retest of the daily 8ema and 219.3 support. Once we lose 219.3 I fully expect a move back to 215.
Something I have noticed is that Tesla really has formed a nice sideways channel from about 205 to 225. It seems the closer we get to 225 we reject and drop and anything near 205 is a call opportunity. I will look for this to play out tomorrow and consider some puts at open on Tesla.
Key support- 219.3 -> 214.4 -> 209.9 -> 205.6
Key resistance- 225 -> 229.5 -> 234
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As if the VIX couldn’t become anymore detached from reality… we have SPY rip from -1% to green and back to -.75% and the VIX did what? It actually unwound more. Makes 100% sense right?
Well I do have a theory on this. Todays price action if you watched it intraday was absolutely bonkers… however, my thoughts about the price action was that we were seeing OTM puts be unwound today. I think people had hedged so aggressively bearish for CPI and with this rally I feel that perhaps (and this is just a theory) that people finally accepted the feds gonna slow hikes in December narrative and before FOMC next week people wanted to drop those puts. That’s really the only explanation I have as to why we would see the VIX unwind so much when on a red day like this. Outside of that besides the VIX is detached from reality I have nothing for you.
10% challenge-
As I explained on my level to level plays at the top today was a tough day to trade. Seemed like things were so beyond erratic I just played some safer level to level longer DTE plays with tight stops and tight take profits.
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I had mentioned how I really thought FORD, and META would miss bigly on earnings. I was beyond right on META. I hadn’t planned to play it but figured last second why not since ive had a great week and it’s a small position.. but I also grabbed a SPX put for tomorrow for the GDP reading. I actually am a little surprised to see Futures green after hours after the META miss. I would have expected a more negative reaction overall market wise. But with GDP and jobs tomorrow I do expect a reaction there.
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https://preview.redd.it/0dkmofsq68w91.png?width=327&format=png&auto=webp&s=3125de1eff1dfd432c241c6824ed39354e3c931d
Wish me luck…. Im hoping im not remind why I don’t do overnight swings and why I don’t play earnings at open tomorrow….
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Tomorrow…should be interesting. I’m playing the opposite on SPY – I assumed we’d get a meta miss but I don’t think the market cares too much about meta anymore. I think overall we’re in a bull week (despite the tech misses) and jpm + whoever copies their collar will force a hit of that high note. From there, I’ll be in lock step with some bear channel low retests.
Good luck Dersch!
You have to factor in Elon dumping stock tomorrow or Friday and helping TSLA break down, no? Seems like we’re all waiting for that shoe to drop.
These seem to be getting a little better, more informative. I read a few of your posts and thought they were rather obvious iterations of after the fact. Glad to see some more insightful analysis.
I’m going to grab some Apple puts before close tomorrow. Hard to see them maintaining arrogant dominance in these times of dwindling spending and less and less extra cash in most wallets.
Looking up how the vix is formulated is interesting. Makes sense why it’s a little lagging and disconnected.
Thank you for explaining level to level
I think key points today are, Bank of Canada, raised rates lower than expected (.5 vs .75 expected) along with stalwarts like msft & goog miss gives the FED to raise low than 75 bps. The US10Y confirmed this, up until the Atlanta FED projected higher GDP. I believe GDP anything below 3.1 is a reason to rally to 387 or higher. Leaving all the weight on Apple shoulders. We can all then have Champagne with tea on Friday ..lol
“I really don’t know if Apple does or not. My thoughts are they have had a lot of slow downs and stuff but im not sure if we see the total effect this quarter or next quarter.” well they are not guiding, soooo..
i got my puts yesterday.
Your DD is awesome, it’s so super informative and a great asset to the community.