SPX SPY ES for 4/22/24

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Thursday night and Friday were quite wild. On Thursday afternoon, with price trading around 5045 I posted my thesis for seeing 4960s directly.

Five minutes later the intense sell off began, and proceeded directly to my last downside level of 4962 (4963.5 low).

Everyone was encouraged to consider closing all or most of their short 1 tick off the low.

Price then rallied ALL the way back up into the open. Many were extremely bullish. We, however, were not. It was a technical hold and a short covering rally. Any failure to clear and bid 5058 meant we could head all the way back down. High of day was 5058 and we dropped nearly 60 handles from there.

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Levels: Reminder, I use a lot of levels, but these aren’t intended to be traded “level to level,” Depending on what the “active sequence” is for a given trade will determine which levels are most relevant at a given time and that is reflected in the trade setups. Trims of existing positions can be considered depending on the action at each level.

See weekly levels for anything higher

5085

5072.25 Feb VAH,

5063-5066.5 top of prior 4930s-5060s balance range. Possible look above and fail of 5058 if it gets that far

5058 Key level for Friday and Friday’s high

5047 (okay to use full weekly range 47-52.5)

5039-5041.75 last week’s RTH VAL to 4/18 VAL

5029-5035.5. BIG initiation for the final move lower Friday and remaining fresh 5-min re-offer. Also encompasses Friday RTH AND overnight VAH and last week’s all hours VAL. I could see this level being front run as low as 5027.

5018-5020 Let’s just keep this here since “Druck” initiated there as we watched him create 30 minute supply for the poor 1:30pm period buyers.

5309

4991.25-4993.75 Friday’s RTH low to VAL

4975.5-4982.25 (wide range encompasses weekly level and overnight profile)

There will a re-bid out of the overnight low at 65-67 but it would seem silly not to sweep the overnight low if we come this close. Will monitor it anyway, however.

4963.5 Overnight low from last week.

4957.25-4960 Possible quick sweep of the overnight low

4936-40

4931.25 possible stick save before 4916 but I want 4916 to print if we trade lower first.

4916

See weekly levels for lower.

COMMENTARY

As per the weekly post every index is at a massive spot so relief should be no surprise. A lack of relief and strong direct downside continuation demonstrates serious weakness. Given this, and the late day failure to drive lower (more than an hour of battle) and technically a failed spike down attempt, I would really expect futures to trade higher first. This opens the entire profile to be probed. Our big seller hasn’t been present until later in the Euro session, so unless other sellers join the party, an early session float up is possible. More importantly, I ate some fish and chips on Friday so that should be good for at least 10-20 handles higher. Again, if this does not happen, then it is a sign of weakness.

I do believe it is very much a scenario, however, where bulls are better off letting last week’s 4963.5 low be taken out before initiating to the long side. A test higher first that fails is once again more bearish. Our seller has proven he can show up absolutely anywhere. While I still see signs of him taking some covers as the passive bid into the lows the last couple of days, he just keeps coming back for more. Keep in mind I’ve said I believe this is a swing short from absurdly higher, and he day trades on top of that swing. Thus, he will not be squeezed any time soon. That said, might he step aside from the day trade shorts and allow the late chaser shorts to be squeezed? Absolutely. Short squeezes weaken the market, and he likes to take their liquidity (them buying to cover into his selling) and then stuff it back down through poor structure. This is exactly what I would do here. If he instead continues to initiate large aggressive selling below last week’s low, then we simply keep our buy buttons deactivated.

TRADES: I’m keeping them a bit general because of the nature and location of Friday’s profile. I’ll update in the AM as usual. I’ll remain objectively bearish until we at least clear and base above 5032.75 but at the same time would not chase a long that high on Monday. Thus, it is likely to be at least Tuesday before we have more specificity to our setups.

LONGS: Do I have to post longs? 🤣

I’ll keep them general. If we float up overnight I think it is fine to carefully play the developing profile with longs if you’re experienced with trading based off a developing profile. A look below and fail of 4991.25-4993.75 is valid but I would trim fast and get stops in place. Any lower and I would prefer to see the overnight low from last week taken out, but we can always play some quick counter-trend pops if they set up in the Discord.

SHORTS:

As mentioned, if we float up higher overnight I would be patient with shorts until there is some kind of proper setup like a box right at a key level. I would monitor any of our levels for this kind of a setup both overnight and into tomorrow since the seller can show up anywhere. I would also short the top of any developing distribution if the 30 minute time frame is in balance. This isn’t super helpful to newer traders less familiar with volume profile, but bottom line watch each and every level and I’ll be there in Discord during RTH with eyes open.

If we do develop value lower than 91.25-93.75 overnight then its a valid breakdown short (I still short a pop, not a dip in those circumstances) and I would take this level to level until 30 min OTFD ended and then assess from there