Trade Plan for 11/14
Fix it Tomorrow Buyers
The weekly post for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to The Week Ahead
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Not much changed today with an inside day on SPY 0.00%↑. Both sellers and buyers were pretty pathetic today. Sellers made an attempt overnight and during cash, but failed to get through the weekly 5993.25 level twice (overnight low 5993 and RTH low 5991.75. Buyers failed twice in the 6030s (premarket 30.25 and RTH 35.25). It is just chop/balance for now. Buyers objectively have to be favored due to recent trend but things definitely feel a bit heavy. It is a bit odd that after yesterday’s selloff buyers have continued to shy away from the 6030s.
For now the range is generally defined roughly as 5990-6040 give or take. I added a small hedge today for long accounts. It will be easy enough to pull it off if we see an upside break with continuation. I am also prepared to get short tomorrow if buyers again show weakness. There is a potential for a significant breakdown here. The dip would ultimately get bought but it would make for a nice trade if it sets up. I’ll discuss below.
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Levels - Note not all weekly levels will be used each day but they could all present as part of an “active sequence” within a given day(s). Focus on the bold levels in general and certainly on high time frames
See Weekly Levels for Higher
6122 (6122-6127)
6114.5
6097
6078
6061
6053.25 reference Monday’s overnight high
6049
6036.5-6040.5
6027-6030 (todays VAH sits here)
6008 reference today’s VAL
6003 todays excess below
5991.75 reference todays low
5984-5986.75 slightly expanded to include today’s low
5976-5977
5964.5-5967 (5967-5976 is already captured on the weekly plan I am breaking it into 2 levels for the daily plan but we need to monitor the entire range to possibly produce a LBAF of 5984-5986.75
See weekly levels for lower
NQ Levels/ranges for Thursday in addition to the weekly levels
21292.75 reference Monday’s high
21251.75-21264.75 includes today’s high and last week’s high
21236-21243
21216 todays VAH
21138
21054.75 reference Tuesdays low
COMMENTARY:
As mentioned above I objectively must favor bulls for upside continuation based on preceding trend but we sit at trend resistance, a major extension, and we are seeing a lackluster bid from bulls into the high. This leaves late bulls at risk of a bigger liquidation and I’m willing to trade the short side to catch that.
If I were to box this range it would be roughly 5990-6040. We can therefore reasonably execute at the edges or take a look below/above and fail. A breakout/down with continuation is also a valid trade. Because of the preceding bullish trend I am very cautious of a look below and fail if I’m short. That would potentially be a juicy long targeting 6030-6040 (and likely an upside breakout). I would flip directionally long if that plays out. A look above and fail can target the bottom and after yet another fail it has the potential for a downside break.
Those are really the major trades I would plan ahead of time, our usual box trades. I’m open to initiating in the middle but would likely need to see something compelling to give me reason to do so. Here’s how I’ve tentatively drawn the box.
We have PPI and jobless claims in the morning so we could see either side of the box or open in the middle. Primarily look to play the edges during cash but as always one can monitor a developing session (Asia, EUROPE) for a trade that is heading toward one edge.
In all honesty the best way to play this is to “hedge the edge.” If you’re long from the bottom you take some profit and add a short to hedge and maybe adjust to directionally short at the top if it fails (by having a smaller amount of longs). Vice versa. Whichever side breaks with continuation you let the winner win. Il do a separate post on this in the near future.