Trade Plan for 11/7

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The free 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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Quite the incredible move on SPY 0.00%↑ overnight. In these situations the open can be rather tricky. Very often an “inventory correction” (pullback) is needed before another leg higher can take place. We have rules in the discord for how we play a “true” gap up (above the prior day high).

As a general rule we would monitor the prior day high if we get an opening drive lower. In large gap ups I may identify a spot from the overnight profile to look to join. For today we gapped up so much we monitored the 5900.75-5904.75 spot which roughly corresponded to the prior SPX ATH. This was shared on X premarket as well.

We indeed saw an opening drive lower, and low of day (cash hours) was 5900.75.

When we don’t have a trade setup play out (usually because of a large gap) I try to identify at least 1 fresh trade setup intraday. This was the only trade needed for the day.

Tomorrow is FOMC so anything is once again on the table. I’ll discuss some considerations 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

6061

6047

6034

6022

5997

5977

5964.5-5967 todays spike

5954

5943-5945.5 (can just use the 5945 level again if you want)

5925-5927.25

5914 (could make an argument for 14-17)

5900.75-5904.75

5880.75-5884.5

5871

5857-5862

5845.5-5850

5834-5837.5

5822.5

5811-5813.5 yesterdays spike

See weekly levels for lower

COMMENTARY:

We are now in a trend phase of the market having broken and sustained above the prior all time high on both ES and SPX/SPY. Thus, there is little reason to plan for shorts ahead of time until we establish balance. Instead, we focus on where it makes sense to remain flat and wait vs where we want to get long. Some members may choose to take counter trend shorts based off these spots where we expect weakness and that is fine, but generally any short should be assumed to be a scalp until sellers accomplish something meaningful.

We once again had an end of day spike up today and thus our first assessment is whether or not buyers can sustain above the spike (65.5-67).

If so and we open on a true gap up then as long as todays spike holds our bias would be long and we would want to execute as close to the spike as possible. If there is a large gap up again I will identify potential spots off the overnight profile in the Discord that we may consider bidding.

If the spike is not sustained then we can expect to see 54 and maybe 43-45.5. Keep in mind in the strongest of trend phases a bid can come in anywhere so something like 50 in between could get bought.

Trading below 43-45.5 would be considered somewhat weak to me unless it is quickly reclaimed. Again, a bid can come in any time but IF price is persistently trapped below 43 then a test of 25-27.25 would be reasonable to expect. Again, something like 30-32 (identified as key in premarket today) could potentially bid.

Below 25-27.25 SHOULD get bought aggressively. If not then we can expect 14 (could call it 14-17) and then today’s low is at risk.

As of now there wouldn’t normally be any reason to expect this low but tomorrow is FOMC and anything can happen.

I will say that today’s low has become quite critical to hold. Aside from roughly representing the prior SPX and SPY ATH there was also quite a lot of volume put in today during the 1st hour. That would mean a decent amount of trapped inventory if we lose today’s low and that inventory sits on top of a thin overnight profile. That is your first risk scenario.

Trading lower first tomorrow is extremely likely to get bought. A more bearish scenario would be making a new excess high during RTH that then reverses back within today’s range and starts popping levels without a bid. That is your second risk scenario if you are heavily long, and could resolve into a clean short by Friday or Monday. This is just planning ahead to know when caution is warranted.