Submitted by DaddyDersch t3_125zv08 in wallstreetbets
As I have been saying since pretty much Friday we have been left with some very low volume and incredibly tight intraday ranges. As you can see below this is our longest streak of less than 1% moves in over a year.
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Watching price action again we are left with significant overnight ranges and from open till about power hour we consolidate in a tight range before we finally break out. I for one can not really remember a time when we have had <$2 intraday range from 930a to 3pm and then had that range nearly doubled during power hour. Its very interesting watching these tight ranges.
It almost feels like there is not enough actual intraday buying going on then EOD all the calls/ puts OI is coming off the books and causing a huge move. Actually one of the most impressive things about today is that for most of the day our S&p500 breadth was 20:1+ which is actually a very strong buy pressure…. Despite that we actually showed a ton of intraday weakness until the EOD when we finally had a rally basically from 230 till EOD.
Tech as a whole today had a very generously green day with Amazon putting in a huge 3.1% green day.
SPY DAILY SUPPLY AND DEMAND
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We as far as I was concerned had no true direction yesterday but with the reversal doji on spy I did favor upside potential. However, today markets chose the bullish side of things.
One of the strongest things that can happen is when a supply is turned into demand or demand is turend into supply. Today we actually have the bulls turning that 395.8 supply into a demand at 395.56 (support). With this we are now on the move to put in a new supply. With this new demand (support) it also opens up the potential to test previous supplies.
Since we gapped over and tested 399.07 supply and turned that into support our upside target should be 405.17 supply (resistance) here.
I see really two scenarios here… first is we push to 405.2 and reconfirm that as supply or put in a slightly higher suppy closer to 407 before we see a bigger retrace to take our 405.2 and 399.07 supply. The second scenario is that we see a pretty big red day tomorrow to establish a new supply (resistance) at 401.3. IF we do that then we should come down to take out 399.07 supply and I would target a retest of 395.56 and 393.07 demands. We either reconfirm one of those as demand (support) or attempt to establish a new demand somewhere near 390.
SPY DAILY PRICE ACTION
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Bulls from a price action stand point actually put in a pretty strong day today. We finally broke out of the 391.8 to 399 consolidation channel and actually turned 399 into support as of now. We also finally saw a turn breakout of the breakout/down triangle.
From a bullish stand point with a breakout of consolidation, the breakout triangle, a closure over the daily 200 ema and a 8/20ema bullish crossover are target here should remain 405.2. Since we reconfirmed 390 as support for this purple channel our next logical expectation is 405.2 resistance retest.
On a bearish stand point we have a potential abandoned baby pattern formed here… not this is a very rarely played out pattern but it’s a fun one to watch… for this to play out we need a pretty good sized red pre market/ open.
Realistically from a price action and supply/ demand stand point here I see a path to retest 405.2 tomorrow and then knowning the historics of the JPM collar day I would not be surprised to see us put in a pretty good sized red day Friday with a red open too (will cover that more tomorrow night). This is our fourth day in a row of very tight $3-4 range days… we are overdue for a big trend day.
SPY Daily Levels:
Supply- 399.1 -> 405.2
Demand- 395.6 -> 393.1
Support- 399.8 -> 399 -> 395.5
Reistance- 401.5 -> 404.5 -> 405.2
FUTURES DAILY SUPPLY AND DEMAND
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On futures here we did not turn supply into demand but we did establish a new demand (support) at 4005.
With that and now the potential to close over key 4055 supply (resistance) our target here on futures should be to push to 4095 and take out that demand. If and when we take out that demand we actually have a potential to turn that into supply (resistance)… that would open up a potential for a retrace all the way back to 4015 to take out those supplies. This tends to be the trajectory that I believe we are working under… I do forsee a potential where we could put in a new supply (resistance) before we get to 4095 though.
FUTURES DAILY PRICE ACTION
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Much like here on SPY we broke through the breakout triangle and today we once again confirmed the daily 8ema as support. We are actually about to see a daily 8ema crossover the daily 200ema also.
With this closure over 4055 we should look for a push to the next major resistance area which is 4085 to 4095.
If we close over 4095 there is realistically a case where we could breakout back to 4160 area but more probably we will reject at or near 4095 and come back down to test the daily 200ema near 4000.
Much like SPY my base case here is an upside push to 4095 followed by a retrace back to 4015.
Futures Daily Levels:
Supply- 4015 -> 4040 -> 4055 -> 4160
Demand- 4095 -> 4005
Support- 4055 -> 4040 -> 4015 -> 4000
Resistance- 4065 -> 4085 -> 4095
VIX
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The VIX had another good sized drop today but one thing to note is that the VIX did leave a pretty good sized gap from 19.91 to 19.45… The VIX of all the tickers ive ever watched is one that does not like to leave a gap unfilled for too long.
I am seeing this set up pretty perfectly for a big drop on the VIX tomorrow to 18.2 with SPY hitting 405.2 and futures hitting that 4095 area… Followed by a very red open Friday and potentially red day Friday too.
DAILY TRADING LOG
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Today ended up being a good day… I got a second chance to close out my 396calls I have been holding (was busy Monday and missed my 399 closure at open). I got greedy on both my 5dte plays and didn’t take 3-4% gains on both expecting some sort of continuation only to get completely chopped up. These tight range days are very tough to trade as everything looks beautiful for contiuation and then you are left with a reversal. Not only that but when the total intraday range 3 hours in is barely $1.5 premiums just don’t pay enough.
I ended up switching to some scalping today and had some very high success with that to recover some profits. I do plan when we see these tight range days plan to drop my dte and play some quick hit scalps. I actually forgot how fun it was to scalp as I havent done true scalps since about december. I don’t forsee myself going back to 0dte anytime soon as premiums still are funky enough to not warrant it but I did enjoy some of these lower dte scalps.
Its important to have a bag of tools to use in all types of markets and styles of markets.
enav7 t1_je6w06j wrote
Big fan of your write ups. Why do you suspect the JPM collar to affect the market negatively?