SPX SPY ES for 8/2/24

Link for Discord Access: Join us. Be sure to check your junk folder.

The weekly plan should be read and the weekly video should be watched prior to reading this post. Weekly Prep and Video

What a wild day and week on SPY 0.00%↑. Since closing my swing short last week in the mid 5400s I’ve been stubbornly refraining from making a big directional call until this week was over (at least Thursday). You can see how one’s emotions may have been completely whipsawed back and forth if one held a strong directional bias. As of Tuesday most assumed we were surely making new lows, And as of last night and even the first 15 minutes after the open many had become extremely bullish for a new all-time high.

I urged caution last night in the newsletter and later in the Discord (and on X) after seeing the early Globex action. I’ve cut and pasted the commentary below:

One of our short setups to potentially produce a lower high was a gap fill reversal to trigger a look above and fail day. Once through 70 a bearish engulfing day was on the table which then triggered a failure back within the 5430-5530 box.

NQ QQQ 0.00%↑ also hit a MAJOR spot with the overnight high and worked down key areas into the open which was cause for additional concern.

Here is the chart for visual reference. You can see how once price was back below yesterdays high and 85 sellers came in strong. Once we traded back below the open (and 70 in particular) the swing short scenario was on.

We have NFP tomorrow morning which will be a huge data point in determining whether or not we break this range to the downside.

The first 5 parts in my free series explaining some basic profile concepts is now available at www.pharmdcapital.com. Click PharmDCapital This section and other free material will be added to over time. Scroll down to the “Want a Taste” section to read it.

To learn more about how I trade, see the post “What is Trading Doggy Style” Here

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 higher

5585 prior box top

5575/76 monitoring for continued presence of afternoon seller.

5570- key weekly level and todays VAH

5555

5542-45.5 7/14 week low, yday open, yday APBL and yday VAL all important

5533.25 Thursday’s Excess high- recall from the weekly plan on the way down (5533 general target for this move as we assess for continuation)

5527-28.75 top of box and yday low.

5518.5 todays VAH (17.5-24 single prints)

5510- still needs to be on your chart for high time frames

5498.75-5502 supply from today and bottom of this week’s developing primary distribution.

5491 (91-93 could be reasonable)

5483-86 - less strong but a failure here would demonstrate weakness from buyers

5457

5444.75 todays low and VAL

5430-5432.5 bottom of box

5417

5408.5

5395

5381.5-85

5473.5-76.75

5369

See weekly levels for lower

COMMENTARY

I have held for this week that earnings may be a bigger catalyst than FOMC and the Treasury announcement which is why I wanted to wait until today to make a directional call. Earnings were “okay” for the most part but not great. Many of these names had been priced to perfection and a large part of this move up in the indices had been based on robust earnings growth. That must now come into question as we are seeing some signs of a weakening economy and earnings have been just “okay.” It may be time to reprice the index and I don’t believe this pullback is an adequate reflection of that. We do still have generally supportive financial conditions given we are starting a central bank cutting cycle but I believe this needs to resolve lower.

I would actually prefer if this week stays inside last week’s range and then break to the downside next week, but NFP will likely determine that.

The only long I will consider is a look below and fail of the box. I’m not even convinced that it resolves back to the top of the box but it may (5430-5530 box). Other than that I will be fishing for shorts and looking to swing.

If buyers are able to reclaim 5530 once again then I may be wrong as sellers would be in some trouble.

I will enter any short based on the developing overnight profile. The areas of interest if we trade higher overnight are:

5483-86- I would consider this minor. If buyers can’t get through here then they are quite weak.

5491-93 area. Any failure here and back below 83-86 should see 57 and likely today’s low.

5398.76-5502. I would love to see this spot as there are a lot of trapped buyers just above.

5517.5-24 is the last spot I would take a shot as it is close to the top of the box but early Sellers still aren’t remotely in trouble.

STFR. That is all.

Trade Setups: Reminder that longs are best if we trade lower first and have not already failed higher. Downgrade any long setups if we have already traded higher and failed. Shorts are downgraded if we have traded lower and failed, but to a lesser extent given bearish short term context.

As above. STFR. STFR more carefully and selectively if we look below and fail the bottom of the box.