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Do you guys remember back in June and July when inflation was really bad (aka not peaked), the fed was telling us the whole time we are going to continue to raise interest rates and inflation isn’t coming down. And what exactly did the market do? It found the one tiny piece of information that it could that was “bullish” and they went on a 2 month long rally only to it see it come crashing down in epic form… This leaves us exactly where we are today.
So the question remains and will remain probably until this week closes…. Was today a needed relief rally after the markets saw 6 red days for the first time since the 2020 coivd crash (granted a day late by my expectations) or did we just witness the bottom cemented in and the markets are about to go on another fake “pivot” rally?
For me on one hand honestly after tapping 360 yesterday and putting the first 6 red days in since 2020 bottom here makes a whole lot of sense, on the other hand there was a lot of oddities about todays rally so lets cover those. First lets talk about TRIN. In general I don’t ever use TRIN to make a trade because to me that’s not the way to use it. In general as you can see a TRIN of 1 is normal. I have never seen a TRIN of 7.48 before. That is one hell of a balance for SPY.
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Now why might the TRIN be lagging? Well lets take a look at pre market and the opening hour…
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Now I have been mentioning this for over a week now but this drop we are experiencing right now is primarily in my opinion drove by non-tech sectors. We have witnessed tech for the most part holding strong despite SPY selling off heavily. What we witnessed today was the exact opposite. Today we saw at open TECH was the sole red in the market. Apple at one point hit -4.5% and Tesla too was very weak. However, despite that the NYSE and the rest of the market was hella green. I have been wondering if we were witnessing a rotation within the markets. I am beginning to wonder if today what we saw was those shorting the NYSE finally took profits. I have been saying that until we see tech breakdown and show true weakness that doesn’t break intraday we wont get the next big leg down on SPY. Now the issue is we just saw that with tech this morning… when the #1 weighted company in SPY is down nearly 4.5% and SPY is up 1% there is something seriously wrong with that picture.
So the question again remains did we see TECH finally break down today but it was masted by the BOE rate rally or is this about to be a market wide rally.
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There is a lot to unpack here on SPY so lets talk about it. For the last 4 days we have seen 370.6 resistance hold up incredibly well. We had not seen any 15min candles break through or close over that resistance in 4 days… that was until power hour today. Now I have been saying as long as we hold 370.6 resistance I am bearish. Today is even more of a wildcard because we breached that resistance, however, we failed to close over that resistance with a pretty violent EOD sell off.
On one hand we easily can say that this was a breakthrough resistance and now we should see a continuation up to 380-390… much like the June low where once we broke through this key 370.6 level we never lost it again and from there the bottom was in.
However, unlike the June rally we have spent 4 total days closed below 370.6 and unlike June this was not a big dump then V bottom rally. In addition when tomorrows candles open that Daily 8ema is going to put todays candle top wick as a rejection of a potential breakout of the 8ema. Generally a rejection of the daily 8ema means there is more downside to be expected (look at August 25th).
Highlighted on the daily chart is 3 possible scenarios with similar candle structure. Whether this is a true V bottom and its only upside form here now or whether this was merely a much needed dead cat bounce is yet to be seen but as of now we are back to playing level to level till we have a direction.
Key support- 368 -> 364.4 (v-bottom support) -> 362.2 -> 359.7
Key resistance- 370.2 (blue falling wedge resistance) -> 374.25 (373.44 gap fill) -> 375.5 (bear channel resistance )
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Futures also has a potential V bottom setting up thought it is not as well defined due to the fact that overnight futures dropped nearly 1.5% before rallying through the morning on the BOE news. This in a way tells me that the overall sentiment is bearish. Without that BOE news futures were poised to open -1%+ red which with Apple down 4% and Tesla down 2.5% at one point would have led to the 350/3500s almost guarenteed.
Futures continues to also reject the daily 8ema breakout but did take out its falling blue wedge.
Key support- 3710 -> 3670 -> 3635 -> 3600 (blue support)
Key resistance- 3770 -> 3805 -> 3835 (black bear channel resistnace)
If we happen to breakout and get through 3835 tomorrow that would give me bias that this is a true V bottom and that we are going to see more upside.
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Apple remains intriguing to me. On one hand among spy and overall markets it looked very strong and it looked like there was no way it was going to see that 149.3 support broken. However, we saw a pretty gnarly open and dropped all the way down to smack that 144.8 support line. From there Apple Calls would have been the golden ticket. So the setup we have here on Apple is that we remain in the blue falling wedge, we put in a new low (lowest low since July 14th). So Apple still remains well over the levels in comparison then SPY does. However we broke a 8 trading day long support today. Apple also closed a full candle back below the daily 8ema and has now closed its 5th DOJI in a row. EOD it did attempt to take out that 150.7 resistnace however failed to do that.
Key support- 147.6 -> 144.8
Key resistance- 150.7 -> 152.4 -> 152.8 (blue falling wedge)
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Lets take a look at Tesla. Tesla had an interesting movement overnight and intraday. Overnight before afterhours closed it was up nearly 2.5%, however by open it was down nearly 2.5%. From there it did see quite the rally through the day. There was a ton of struggle at 283.8 before the EOD spy push green accelerated Tesla through it. However, despite that push green we did not see a close over the daily 8ema and this is actually the 2nd rejection of a daily 8ema breakout in a row.
Interestingly enough this candle close is a bigger bodied dragonfly doji (the opposite of the September 26th candle) and with this I actually expected to see a rejection and downside from here. Much like we saw on August 16th and August 25th.
Not shown or reflected on the daily but Tesla died out right at key weekly resistance of 287.9. We have two potential patterns forming on the daily. We have the black falling wedge and we also have a V bottom forming with the red support line. The thing with the black falling wedge that unless Tesla sees a nice red open under 283.8 then that will be broken. Usually that to me would mean there is more upside to come but with the daily 8ema as resistance I favor downside until Tesla closes over the 8ema.
Key support- 283.8 -> 281.4 (red support) -> 270.2
Key resistance- 291.8 -> 300
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Then there was the VIX. Today we saw the VIX pre market put in the highest high since June 13th. However we saw VIX from there unwind and never stop. The VIX definitely paused at 32 and 31 especially for a long time, however, in the end she unwound and found support at 30.
This is where things get unpredictable and anyone telling you they know for sure what is going to happen next is lying. With the VIX back to 30 (but over it) and SPY back to key 370.6 resistance we either saw the VIX unwind to prevent full on capitulation with the vix breaching 40-50 so that we can continue downward OR the VIX is confirming with SPY that the bottom is in.
For me going forward I base a lot of stuff off the weekly close on Friday night. If the futures and SPY weekly candle closes OVER the weekly 200ema and the VIX closes below 28.3 I would think this is a real bottom and not just a dead cat bounce. I would be very interested in some 14 and 30dte calls. I would see SPY retesting 390 and possibly even 400 by end of October. However, if EOW we get a sell off with SPY closing below the weekly 200ema (regardless of where the VIX is) then I would have a really hard time being bullish.
A close over the weekly 200ema then we most likely are looking at a December 2018 weekly 200ema support double bottom… a close below the weekly 200ema and we are looking at a covid March 2020 or August 2011 pause before we sell off even more. Tread lightly here guys.
10% challenge-
Today I had to take off just before power hour so sadly I missed the fun but was able to have a pretty good day still. You guys who know me know that a true trend day like this with extreme momentum is absolutely my least favorite type of days to trade. I treaded very lightly today.
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I want to remind everyone what happened last time spy was 360-380 and the VIX was over 30… a lot of people blew their accounts up. This is not the time to be playing hot and heavy or full porting (well really no time is the time for that) but this especially is not the time to be doing that… if anything when the VIX breaks 30 we should be leveraging down…
The VIX being over 30 adds a ton of volatility and unpredictability to the markets. I watched a few plays today that I took, wanted to take and that I saw others take push, reject hard (triggering stops) only to push well through it. I would never recommend removing stops but I would recommend when you enter a play you need to be entering closer to resistance and supports then usual. This needs to be a violent entry without hesitation and it needs to be followed with early profit taking. Don’t let a position that’s green and the price action is pausing sit. Take the proftis and GTFO… 2% win is a hell of a lot better then a -20% stop loss hit. Remember LIVE TO TRADE ANOTHER DAY
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Daily youtube video be up later!
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How do you think market will react to jobless claim and PCE price index?
Thanks for your analysis! Looking forward for your YouTube video!
Well done. Strange days we live in. Thank you for the TA.
Normally I would expect a couple day bounce after this rally but given the reason for BOE stepping in and buying up bonds, it’s extremely bearish. Sounds a lot like we’re right on the edge of a cliff right now trying to hold on as long as we can. Still a very dangerous time to go full port puts though. I could easily see us rallying for 2 weeks based on pure hopium lol
Today was a very very weird day indeed. However one argument for a bullish day tomorrow would be todays wick being low on futures. One can argue it’ll momentum cuz that’s usually how those candles work. If tmr bullish I’d expect another 2-3% if not more on spy. If red I’d run for the hills and just hold cash cuz that would be fuckery and a half
Looks like Spy headed to fill some gaps!
Any thoughts on NFLX today after a 9% run up?
JPM collar, whats going on there? Are they rolling or changed strategy? Do retail get to know this or until they publish? I believe its the later.
I thought the 370 resistance would hold so I bought puts at 369 in th afternoon. But was I wrong. Luckily the red on the last few minutes let me sell those puts and only lose 20% instead of much much more. I think we keep going green. People will keep thinking hr fed is going to pivot like BoE is doing until jpow tells them again for the 50th time he is not
6 days of bearish action, possible nuke threats in Ukraine, main gas pipe bursts, hurricane hitting hard AF, how can we be bullish??
BoE phone a friend to JP per your theory?
Just another deadcat bounce. Waiting for some bad news. Jump into puts. Boe is just kicking the can. They are so fukt.
Totally agree that the rally should have happen yesterday, but no one could guess the yield rate react this way, up and down 6-7% back and forth in less than 3 days, which make the boe come in to save it
Sold my calls 30min before close (20 min too early) and bought 2DTE puts right before the drop.
Im fairly confident it will go down. So it probably wont
Man I got in way to early on my calls expecting today’s rally yesterday, got burned badly. I had the right idea just wrong timing! Trend days are my favorite! Buy in the morning, get back to my 9-5pm work sell at 2:30pm CT – and call it a day! Wish every day was a trend day lol
I think gdp at 8:30 will determine if this was a dead cat bounce or a v shaped recovery till next cpi reopert
Great analysis! Thank you for sharing
JPM collar, whats going on there? Are they rolling or changed strategy? Do retail get to know this or until they publish? I believe its the later.
They got me good today…was holding calls overnight expecting big green but when we dumped violently at open i decided to cut them at basically breakeven. I did get in a 50% win on LNG call that would’ve gone to 100 but gotta take profits as you say, but watch that one, it may get over 170 again. Good point you make about getting into a position aggressively. I tried to enter a Tesla put on the morning drop and didnt get filled and I shouldve left it. Instead I tried again, executed at a way worse price and had to sweat it out just to break out w a 5% loss and lucky i did
Okay the week is not finished but remember what I said about the CNBC clowns. It looks like it might be true, always reverse them.
As always. Appreciate the write-up
Bulltrap in the morning
I will award you every time can for you TA
Did anyone notice the insane amount of deep ITM puts that traded yesterday? 10x the amount of $1M+ notional value puts traded compared to calls. I’m talking strikes of 400 – 500 and expirations ranging from OCT21 – DEC23.
Haven’t seen anything like this, or maybe just not paying close enough attention. Will be very curious to see what the OI on these are at open.
Look like we test the lows again. Negative gdp and lower unemployment
Personally I think GDP tomorrow might be the lynch pin for either another bear market rally or further downside. BoE QE was the primer but if we get a bullish read off the GDP I think markets will use that to fill all the gaps above us and make an appearance at 380-390 before we snap back to reality. Then again apparently UK almost had their own 2008 moment today so that might indicate the actual crash is closer than we would all think.
Dude, I really enjoy, and pay attention to, your daily breakdowns and analysis.
My own feeling (and it’s just a feeling), and I’m no expert… is that the actions at BOE have gotten the permabulls once again thinking “fed pivot”, which any but the most regraded of regards know is absolutely not gonna happen for at least another year. Long puts and 1w atm calls.
Edited: because Automod told me I was regerded, Fuck you permabulls. I want to see you kneeling before me, auctioning the opportunity to suck my cock.
So I keep my spy puts unless 383?
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What’s the YouTube channel???
You always reference different doji for the candle shapes. Do you have a link to anything that describes what the different symbols typically mean? I’d love to study it.
Do you think the momentum will carry into tomorrow? There was a large red volume bar at the very last minute of the trading day.
Any thoughts on Disney puts tomorrow since the hurricane wrecked Florida today?
Your TA just keeps improving. Keep it up. Appreciate that you share your actual plays now as well
Wow we bounced off that 359.7 exactly
Wtf happened to people posting a tl;dr