Market Analysis for 12/23

Be sure you have read the Trading Doggy Style Starter Kit. I will be adding to this over time, likely first focusing on example executions. Trading Doggy Style Starter Kit. A recent update has been made with some additional content.

The weekly post for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to The Week Ahead

In the plan for Friday, we discussed the bearish nature of Thursday’s profile. Below ES 5945.5 we were expecting Thursday’s low to be taken out and to ultimately see 5876.25-5882.25. However, we had been monitoring for a swing low to form in this area so there was little reason to press shorts once 5876.25-5882.25 was hit overnight.

Because of this I closed the last of my puts right at the open for just under a triple:

The open was a bit fast and furious and we had another great example of nuance playing a role in trade decisions. Sellers defended Thursday’s low precisely to the tick from below and I find this to be indicative of weaker sellers.

After sellers defended a second time, we had a quick decision to make. I assessed that back above 5931.75 would give us a huge squeeze. I needed sellers to produce a lower low to consider joining them and would instead grab a long if they did not as it would be a second example of their weakness.

The following commentary took place between 10:07 and 10:12. At 10:10 the higher swing low was made and at 10:13 price cracked Thursday’s low 5931.75.

I rarely pound the table on holding a position, but Friday was one of those instances. At 10:27 EST ES was trading 5950. It went 100 handles higher from there.

This was an amazing long, but does it mean I think the swing low is in?