Market Analysis for 12/27

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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

We left off with the Monday night plan ahead of the holiday. We had seen no signs of the big seller and had in fact seen evidence of a familiar bull in the tape. Monday closed on a spike up which was a bit of a gamble for this bull, but his MO is to do things like this and take advantage of low liquidity low volume conditions to drive price higher once he has a position.

The key 6030-6033.5 spot held on Monday night (low of night exactly 6030

We had been monitoring for a break of Friday’s high as confirmation of a bullish reversal (cautious of a look above and fail at 6060-6063).

Sure enough, the Tuesday half day was quite a bullish day, ripping through Friday’s high and closing on yet another spike up. The overnight weakness form last night was not unreasonable as we had traded 240 handles higher in just a few days, but we had planned on being cautious into the 6100s anyway. We saw a nice pullback during the Euro session and into the open, which ultimately back tested 6060-6063 from above (6063.25 today’s low)

I still believe caution is warranted up in the low 6100s ES but so far, the tape has been quite bullish. Today’s profile ended up a bit top heavy so we will have select locations where we will initiate longs so close to supply/resistance.