Last week I said I was still bullish on SPY and that I did think we would see 430… I still feel that way and I think that we are seeing the pullback before the next move up playing out here perfectly.
Before the bears absolutely took the bulls by the horn middle of day and plunged them off the cliff… I was targeting two major support areas on SPY and QQQ for tomorrow… while anyone who follows me know on a daily time frame my timing may not always be perfect (as I expected tomorrow) my levels almost always play out… Being that these levels played out a day early for me… I actually am expecting a bounce tomorrow… or by EOW minimally.
SPY DAILY SUPPLY AND DEMAND
From a supply and demand standpoint we had a huge day… so we put in a new supply (resistance) at 418.78. This now makes this 418.78 to 419.5 a major supply and resistance area. In doing this we have no retraced all the way back down to take out 416.75, 415.58 and 413.91… we did fall just shy of touching 413.05 supply just under the daily 20ema though.
Taking out the daily 8ema is a bearish omen for the markets, however, bouncing off the 20ema like we did today is bullish in nature. This should be seen as a support bounce rather than a bigger sell off for now.
However, IF we continue to leg down tomorrow and close a candle under 413.05 supply which is the daily 20ema then I actually might be more apt for a that we see a retrace back to 410.2 demand (Support) before we bounce. This might be an example of being a day early for the bounce.
SPY DAILY PRICE ACTION
Bears took us all the way down through the daily 8ema and bounced us right off that red support line at 413.7. As of now that should still be considered support until proven other wise.
Support for tomorrow of that line will be 414.6 meaning bulls need a small gap up overnight in order to reconfirm and hold that support with hopes of a push up to the 417/418 area.
Now if this is the next leg down what bears need to do is break through 414.6 support and most importantly break under the daily 20ema and close a candle below it… If you remember we traded in that 410.2 to 413.9 range for almost 3 weeks before we finally broke out to 420… this actually is a back test of that support of that range. This is the bulls attempt to turn previous resistance into support.
Failing to do that would result in a retrace back to the 410 range. To really sell this market off bears need a closure under 410.2. That 410.2 level is our daily demand so that likely would be a major support bounce area for bulls.
SPY Daily Levels
Supply- 413 -> 418.8
Support- 414.1 -> 412.3 -> 410.2
Resistance- 417.1 -> 418.6
FUTURES DAILY SUPPLY AND DEMAND
Nearly identical movement from futes today setting a new supply at 4208. In doing this we would have expected the move down to the 4149/4143 supply area. We did come down and perfectly bounced off 4153. As of right now that is major support to watch.
There is a chance overnight bears get this to 4149 to take out that supply but from here I expect a bounce off the daily 20ema.
If bears continue their sell off though the biggest support will come at the 4127 demand.
FUTURES DAILY PRICE ACTION
Futures did not quite breakdown and touch that red support line that SPY did today. However, Futures did come down and perfectly back test and bounce off 4153 support form the previous 4122 to 4153 channel.
We also are setting up to close exactly on the daily 20ema which would favor a possible double bottom support bounce and move back up.
The most probable play out here is a double bottom off 4158 that leads to a move back up to the 4172 to 4188 area.
However, if bears manage to break this down further then support is at 4125 if we see back to back selling off happen.
Futures Daily Levels
Supply- 4149 -> 4208
Demand- 4128 -> 4198
Support- 4158 -> 4125
Resistance- 4172 -> 4189
QQQ Supply and Demand DAILY
I said last week I was looking for a possible sell off back to the daily 8ema being that QQQ is in extreme bull momentum in order to find an opportunity for a long entry. We are looking to be getting just that.
The daily officially turned 337.63 into a new supply… In doing so we come down and take out 337.29 and 333.11 supply. Now we do have another supply left down below at 326.82 but that is at the daily 20ema. That would be a larger sell off and with us being in extreme bull momentum I would be very surprised to see that move happen (not that it cant happen though).
I will be looking for the bulls to bounce off the daily 8ema tomorrow and look for a run back to the 336.37 demand area.
However, If this sell off continues then are most probable sell off target is that 326.82 supply which is also the daily 20ema. 325-326 is a pretty strong demand (Support) area that we would need more momentum to break through.
QQQ Daily Levels
Supply- 337.6 -> 326.82 -> 322.31
Demand- 336.37 -> 325.99 -> 324.99
The VIX actually had a really nice breakout today and after bouncing off the 16 support area 3 days ago now this is now retesting critical resistance at 18.86. IF the bears (spy) can close the VIX over 18.86 and target 20.08 then I would believe in a bigger sell off on SPY happening. However, this is a probable rejection area for the VIX. Even if the VIX gets to 20.08 we still honestly are more likely to reject then we are to sell off…
There just isn’t any real momentum to the downside and even watching the intraday movement today the dip continues to get bought.
With no debt ceiling talks till tomorrow minimum and FOMC minutes at 2pm we likely are to return to a slightly bullish narrative. There is a chance the market could bearishly take what JPOW had to say at FOMC but historically they usually receive FOMC minutes well not poorly.
Yellen is scheduled to talk at 1005am though so that could be a true wildcard. Tomorrow with Yellen and FOMC minutes is likely to be very volatile.
DAILY TRADING LOG
I really struggled this morning in that very tight range and chop… just seemed like premiums weren’t paying out for the move that was happening. However, was really able to capitalize on that mid day sell off and overall had a great day trading. Intraday secured another weeks of profit goal. Currently even if my QQQ and SPY Call lottos go to zero tomorrow I have officially secured 2.5x my weekly profit goal… if they don’t go to zero tomorrow then im sitting at 3x weekly profits goal.
Currently assuming my week ends profitable this will be my 8th green week in a row… that makes it tied for my second longest win streak in a row… my longest current win streak (since I have started documenting the way I do now… remember I used to work full time as a nurse and just traded in my off times) is 10 weeks in a row of green.
Just for transparency my longest red streak is 4 weeks in a row.
By - DaddyDersch