How I Sniffed Out the Swing High (Top?)

I posted a “Trading Doggy Style Starter Kit” that I think will benefit both free and certainly paid subscribers. I will continue to build this out over time with additional videos, examples, and explanations. It was updated last week with some additional content.

Trading Doggy Style Starter Kit V2

Ahead of last week, most were calling for a rally on widening breadth. We, however, were skeptical. There certainly were a number of oversold indicators as IWM 0.00%↑ and DIA 0.00%↑ had been under constant pressure, but it was apparent to me that money had simply rotated into MAG7 and participants were still max long (NAAIM was 99.24). We were trading in the +2-2.25 standard deviation band of YTD VWAP and prior instances had led to a meaningful pullback. I try to keep the analysis here as objective as possible. Coming into last week, SPY 0.00%↑ was trading in a 2-week box which is objectively neutral. Given a preceding bullish trend, there was every reason to favor upside resolution.

I, however, favored downside resolution which was a bit of a break from objectivity. I’ve had a lot of questions about how I sniffed this out, so I’ve laid out some of the progression here.

It is first important to understand how a swing high forms. This is a brief explanation from August. We sold off 250 handles a week or so later:

In the first couple weeks of December, I had identified what appeared to me to be a very large long position exiting.

From 12/12, patiently waiting:

From 12/13 premarket:

And from Friday 12/13 just after open when I spotted something in the action:

From last week’s plan below the paywall with a few extra nuggets:

From 12/16 high of day 1:33pm EST:

Also from 12/16, identifying that QQQ 0.00%↑ was looking for its top:

Then perhaps the craziest part of all this with contract roll. I’m quite certain this has never happened before, and I’ve talked to dozens of long-time traders and current/former market makers, and they’ve never seen it.

My assessment of it:

On 12/17 11:51 EST it became clear that a large short position was being accumulated:

I provided the summary from August to the group in Discord after the close on 12/17. The selloff of more than 280 handles started on 12/18.