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Well as per usually we DID get a red open on quad witching day and we also closed lower than opening price. However, this was an extremely choppy and miserable day to trade. As you can see the bank situation is far from over… last weekend we actually went into this with the same exact issue… and we were saved over the weekend and that was the 2% futures rally.. However, going into it again this weekend can the fed and the big banks save us once more? Stay tuned to find out… As you can see next week is FOMC and as of now there is a 38.7% chance of a fed pause and a 61.3% chance of a 25bps hike… for me I don’t think that matters… I think we are pretty much guaranteed a 25bps hike… but what is more important than that? The dot plot… that dot plot is not going to look good at all.. With all these extra money (yes I know this isn’t QE and its not the same as jpow money printer…) but there is still almost $2 trillion extra dollars being injected into the economy right now… that is NOT going to help the fight for inflation at all.. I think JPOW is going to come off very hawkish and I would be very surprised to see him let up. Jpow has officially found himself in the worst case scenario… he is facing a legitimate financial collapse and facing runaway inflation. He has found himself in a no win situation… something will break. And its coming quick and fast. SPY DAILY SUPPLY AND DEMAND From a daily supply and demand standpoint we are stuck between two big levels… we have our downside demand (support) at 385.87 and our upside supply (resistance) still at 405.17… the way im seeing this play out and that huge rejection off the daily 20ema yesterday with todays red inside day is that we actually are setting up for a new supply to be established at 396 on Monday. That would then open up a retest of 385.87 demand (support). From there we either reconfirm 385.87 as demand (support) which I find unlikely… or what I see as a higher probability is that we break through that demand and attempt to establish a new lower demand (support) somewhere between 376.67 and 385.87. SPY WEEKLY SUPPLY AND DEMAND From a weekly supply and demand stand point we actually have not quite come into any new levels. The biggest thing to note though is that this week we came down and nearly perfectly bounced off demand (support) at 382.21 that was established back in December. Until a new supply or demand is established the weekly does not provide enough details for a trade. However, it is clear that this double demand (support) area from 382.2 to 385.9 is extremely strong and we will need to see a pretty sizeable drop and more importantly closure below that in order to see further downside. The weekly as long as we hold 382.21 I actually do favor slight upside. SPY DAILY PRICE ACTION from a daily price action stand point I actually am very bearish. The way I am seeing this right now is that this was a failed breakout (yesterday) and that this is a pretty massive bear flag forming. This bear flag has a target of 378. We have established a really large breakout/ down triangle which provides support at 388 and resistance at 393.7 on Monday. If one of these levels breaks that will be our first sign of where we are headed next. We did actually end up closing at 389.99 which puts us back under key pivot point of 390.1. This failed breakout/ recovery and closure back under that level is very bearish to me and once again sets up a run to this green channel support down at 378. The biggest thing to see here too is this is the 2nd day with a 20ema rejection and we lost the daily 8ema support again. I see far more weakness than I do strength here on SPY. SPY WEEKLY PRICE ACTION Now the weekly much like supply and demand weekly doesn’t really provide us much details. The biggest detail I see here on the weekly is the fact that we attempted to recover the weekly 8/20ema and were immediately rejected. This rejection is very bearish and to me sets up a lower downside. Now I also note here though that we did close under 390.1 for the 2nd week in a row. This to me with 390.1 as my key weekly pivot point (and really the key yearly pivot point) find myself looking for 375-382 before looking for a retest of 396.5. Now the hardest thing is that we have FOMC next week which is very likely to provide turbulence and provide unpredictability but I remain bearish going into next week and I remain much like I said back 2 weeks ago bearish on FOMC and the weeks to follow. SPY Weekly Levels: FUTURES DAILY SUPPLY AND DEMAND Just as I suspected last night we are getting a 3995 supply (resistance) established on futures. That is very bearish and tells me we are right on track for a push back to 3895 support. This current supply (resistance) and demand (support) from 3995 to 3895 has actually set up a really impressive 100 point range which we have been trading within for about 8 days now. With this new 3995 supply (resistance) my downside target remains 3895. IF we were to lose 3895 we should look for 3833. I actually was targeting that on Wednesday but we did not quite have the strength to get there. The most probable daily case is that we will establish a new demand somewhere between 3833 and 3895. This would be the bounce play and that would be when I look to go long (or at least close my short). However, I still believe there is further downside to go. FUTURES WEEKLY SUPPLY AND DEMAND From a weekly supply and demand aspect we established that 4055 supply (resistance) the last week of February. From there we bounced off 3866 demand (support) that was established back in December. As of right now until a new demand (support) is established we should be looking for further downside. However, I would also play slight caution here that this 3866 level has been extremely strong and we should worry about a bigger bounce off that level. On the other hand the more that this demand is beaten on the bigger chance that we drop through it. FUTURES DAILY PRICE ACTION The futures and spy daily patterns here tell me a lot of the same picture. However, as I was suspecting we actually came into a beautiful double top right off 3995. That 3995/4000 level has been a major pivot level for over a month now. With that rejection off the 200ema also and closing back under the daily 8ema and more importantly back under 3955 support (remember this was resistance for the last 4 trading days before we broke through it yesterday). Futures is set up perfectly for a retest of 3920 support. This is the major pivot level for futures. If they lose that level then we are heading back to that December consolidation support area which sits near 3800 to 3890. Now the breakout triangle here for the bear flag on futures actually shows a support at 3905 and resistance at 4005 for Monday. FUTURES WEEKLY PRICE ACTION Now futures weekly here actually closed out a massive doji candle here as opposed to that more hammer candle on SPY weekly. The biggest thing I note here is that we actually are perfectly rejecting the JPM collar calls at 4030. Why does that matter? Well the collar roll is officially in two weeks. Historically speaking over the last year I would say we are more likely to be at the collar puts (currently 3600) then we are to be at the calls… Now there was December collar roll where we were closer to the calls but that is not always the case. My downside target here remains 3770 to 3850. Futures weekly also hard rejected the weekly 8, 20, 50 and 100ema this week. Futures weekly levels: VIX Now its actually the ugliest bull flag I have ever seen but there could very well be an opposing bull flag to the SPY bear flag. IF that is the case we are in for a massive push up on the VIX. I think the most important thing to note today about this VIX candle is the fact that it did not see the normal massive move up followed by a massive move down. This VIX candle shows me that hedges went on (since we opened at 22.92) early in the day and they never came back off the books. This market officially is positioning itself bearishly. I mentioned the daily 20ema support at 22 was the bounce spot and we actually did end up bouncing off 22.58 just over the daily 20ema. Upside target is once again the 28-29 range next week. DXY I had mentioned this DXY daily breakout triangle and we are still in it. The dollar didn’t quite dump to that 103.6 level of support but is now rejecting the daily 8ema and clearly trending down. I still am learning the dollar and honestly with stocks down and the dollar down I still am trying to find the correlation and how to benefit. My thoughts are obviously the dollar is losing value with the financial system issues and potential pause/ rate hikes next week. However, I would love some feed back on others thoughts on the dollar. 10YR YIELD Of the VIX, DXY and 10YR Yield I actually find the 10yr to be most telling. If you take a look at the 10yr you can see that we are in a clear trend for the last 5 days now… huge drop in rates (because people are jumping to safety of the rates) followed by a huge rise in rates (markets going back to risk on) only to drop the next day. The thing I find most interesting today and the VIX did the same thing is that for the most part the 10YR did not recoil. TO me this shows that people found safety in bonds and this time they chose not to leave that safety. I think this is extremely telling of the future and whats to come. Market (or at lest big money) realizes how dire this banking situation is and I believe they are very much so positioning themselves for the worse right now. The most interesting thing is that we can not seem to break the 10yr lower than 3.395%. That has been a huge “support” since January 20th. WEEKLY TRADING LOG Today I actually found myself this morning in quite a bit of drawdown. I took some heavy losses turning in 4 losses (almost all full stop loss) out of my first 7 trades. I decided to take a little mental break and go for a walk. I came back and was able to put in 7 back to back wins in order to close out a green day. Overall profit wise not a bad week. I was very happy with my Monday, Tuesday and Wednesday trading. However, the last two days I found myself being chopped up by everything. I just seemed to either 100% get stop loss hunted or hard bite the fake out. I found price action just to be very erratic and hard to trade. I also found that price action (and premiums) at times move so fast that I was left in the dust as premiums dumped 10-20 cents at a time. The other issue that happened a few times today is an extreme lack of pay out on premiums. I had two times in calls and one time in puts that for the DTE I use (which is my standard) I found that a move that was an easy 5-10% layup barely hit 1% profits. I watched a call and a put (at different times of course) move in my direction and lose value the whole time. Tough finish to the week. But ready to take on next week! submitted by /u/DaddyDersch |
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Author Of this post: /u/DaddyDersch
Title Of post: 378 or 405.. what comes next? 3-17-23 SPY/ ES Futures, VIX, DXY and 10YR Yield Weekly Market Recap and Analysis
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