The Week Ahead for SPY/SPX/ES
Note: The price to new subscribers only will increase at the end of this week. See the announcement here: Pricing Change
We remain long AAPL 0.00%↑ commons, GOOGL 0.00%↑ commons (and a 10% runner on 160 calls), NMM 0.00%↑ and MO 0.00%↑ All are comfortably green. We will continue to monitor for occasional non-index swings as opportunities present.
For SPY 0.00%↑ this week we were primarily monitoring 5769 ES coming into the week. We were looking only for “longs until proven wrong” above 5769, with our eyes open for traps below.
From last week’s commentary:
We can see that the overnight session early morning before the Monday open saw an aggressive sell to the 5748 level which was snapped up just as fast. Any time sellers made an attempt below 5769 the dip was bought aggressively. Our best long of the week was easily the Tuesday long at low of day. I recapped that trade and some interesting nuance here 9.24 Long Explained
5769 was not violated again after that entry. For those that chose to swing the trade it ultimately ran 75 handles to Thursday’s excess high.
I did write a non-paywalled post on how I convert a day trade to a swing trade. This allows me to take advantage of my precision day trade entries, protect the position, and let a position run. It can be read here Converting a Day Trade to a Swing Trade
I will be doing more free and paid posts such as this in the near future to serve as a bit of a “starter kit” for subscribers.
That brings us to Thursday’s high which I mentioned was an “excess high.” Friday’s was as well. If you aren’t familiar with the term, see the free piece (along with the rest of the 5-part series) here: Excess / Non-Excess
There really was a decent amount of selling during the week but most of it appeared to me to be profit taking and dealer dynamics (associated with quarterly options expiration). Thursday was the first day I spotted a meaningful seller in the tape since 5400 SPX. See the following X post: We Have a Seller
This doesn’t mean we will see a selloff imminently at all as these “innovators” often feel things out a bit early before committing to a position. Sellers get wrecked all the time, but when I spot a very large seller that sells with “tactical intent,” I pay attention. The last bit I’ll share above the paywall that has my eyes out for a potential reversal is VIX futures, $VX1. You can see above that I was on watch for this reversal this week and we certainly got it, culminating on Friday with a very large move higher. I had drawn this picture on Monday just off low of day.
What is particularly alarming about this is the fact that we saw it on a Friday into the end of a quarter. Look at the daily chart into every other end of quarter. Volatility is almost always sold the last few days into the end of a quarter. The reason why is outside the scope of this post.
We will have our head on a swivel next week, particularly after Monday. Sellers have accomplished nothing and are frankly quite far from accomplishing something. I will be monitoring for a reversal in the same manner discussed on the recent interview with the Futures Radio Show seen here Futures Radio Show