Market Analysis for 1/3/25
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The weekly post for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to Market Analysis for The Week Ahead
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.
As if the overnight session wasn’t wild enough, today’s cash session was even crazier as liquidity remains quite low and intraday volatility quite high. It was a very difficult day to trade at times as there was aggression on both sides. While I think intraday liquidity will improve at some point, I do think the intraday volatility and larger ranges are for the most part here to stay for the year.
The overnight session triggered our short setup failing 5953-5957 and sold off hard for 40+ handles, turning into our long setup on the look below and fail of Monday and Tuesday’s lows. This then rallied 85 handles to the overnight high before sellers stepped in. This then triggered our look above and fail of 5979-5982.75 short selling nearly 50 handles into and after the open. Buyers then aggressively bid it back up but once again failed to maintain traction above 5979-5982.75 which led to weakness down to our key weekly level of 5876.25-5882.5. Here is a visual of the important of today’s low as shown on an RTH only 24 hour chart of ES (it will look different from your daily candles).
This also corresponded to a test of the 20 week sma on SPX and a brief sweep of the 12/16 week low.
Today’s high was a near perfect back test of the 50sma and 5sma from below. It is worth noting that the 5sma has crossed below the 50sma for the first time since September.
Buyers have some work to do to terminate this selloff. We did see a decent bid come in off the lows today, but we have to be careful ruling out that it was short covering before they attempt the gap below.