SPY/ES for 9/4
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The look above and fail of last week’s high, back test of the top of the box from below, and resultant trade below 5646 (Friday’s spike base) triggered weakness for today from which buyers were unable to recover.
From last night’s plan:
We had been monitoring the recent box range on SPY 0.00%↑ as it developed for nearly 2 weeks. We had been careful about getting too bullish into the top of the box and careful about getting too bearish into the bottom of the box. Friday’s close looked extremely bullish but was still just a trip to the top of the box. We hedged into that strength, adding SPY 9/20 550P to a prior small hedge. I had additionally been pulling back on some of my long exposure that was added in the 5100s. The 550P briefly went in the money today at the low where they were up 200%+ on the day.
I wasn’t ready to directionally short the market ahead of the long weekend, but the range felt like it had been seeing a fair amount of distribution. From last night’s plan:
Today’s low sits at a rather key technical location as seen here on SPX. This 5500 is a major horizontal and both the 20 and 50 day SMA sit here as well. While away of the potential for traps, we have a downside box break that must be respected. In tonight’s plan we’ll discuss downside targets, along with how we will identify if this is to be a trap.
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