I stand corrected. I expected a boring day today and it was actually quite interesting! This morning was particularly interesting. It was like watching wack-a-mole for the stock market. Any time SPY managed to cross into the 450 zone, the market was like "Nope *WACK*".
All jokes aside, the reality is today was a hot mess and SPY was full of both bear and bull traps for intra-day traders.
My levels I was watching were:
Anticipated Open: 446-450
Actual: 449
Anticipated High: 453.07
Adjusted High based on Open Price: 451 (Projected Resistance)
Actual: 450.99
Anticipated Low: 447 followed by 443 if 447 to be broken.
Adjusted High based on Open Price: 447.04 (Projected Support)
Actual: 445.85
My support level was respected based on adjusted low. I got long at this point (got a little scared and almost got stopped out consistently). The biggest trap for SPY today was around 1 pm to 2 pm. I saw huge volumes of put contracts being sold as it really looked like SPY was going to fail, but I figured it was a trap. The only thing that stopped me from just taking my profits there was, it usually only happens once a month that my Adjusted High is wrong. Even on the most bearish of days, SPY will test my adjusted high at least once (And most of the time, exceed it). I ended up not waiting for the full move, I got out around 450.05 because at that point SPY was just playing games with people and I wasn't here for it.
Verdict:
I mean, is anyone still fooling themselves that SPY is bullish at this point? I think it should be very clear that SPY is very weak.
The fast sell off at the end of day was actually a little surprising, to be honest. Wasn't expecting that, but yeah, it just sort of puts the nail in the coffin.
Anticipate further consolidation tomorrow into Thursday when the news is announced about inflation.
But we all know what the verdict is on inflation. Its a problem. I have already read articles comparing now to the 1970s. I URGE ALL OF YOU to look at what SPX did in the 1970s when inflation ran rampant like it is today. Also, a really interesting Tidbit of the 1970s is that there was also mass worker shortages. The economic situation then is very comparable to now. So let's pay attention to that. Stop looking at the 2008 financial crisis. That is later down the road. First its inflation crisis (SPX from 1970 to 1979). Then its government intervention to curb inflation (S&P/TSX Composite Index 1980 - 1984), then its housing market crash (S&P/TSX Composite INdex 1990 - 1992) then housing bubble burst and national economic crisis (SPY and SPX 2007-2008). Check those indexes during those time frames to get an idea of how the market will react ;). Remember, those who forget history are deemed to repeat it. But you need to look up the correct history. 2008 financial crisis is not our situation yet. It will be, I am sure, but not yet. Right now its just inflation crisis.
My position:
Long 5 call options dated Feb 14th 451 strike.
Bought @ 11:45 ish, sold @ 1435 ish.
Still Active: 10 puts (original number was 20, but have been scaling out), expiry March 31st). Hoping to exit completely by Thursday.
Levels for tomorrow:
Look for resistance/highs around 450 ish. SPY's inability to make any of my projected high targets today (mind you it was off only by 0.01 cents from my adjusted high, I will let it have that ;)) mean that we may not see this level, but this is adjusted based on SPY's weakness today.
We could see lows around 442.
Keep in mind, SPY had below average volume today. This likely threw off these previous projections which ultimately may be leading to conflicting ones tomorrow. This is why I always do corrections based on open price!
SPY is also doing that HEY GURL pattern (I don't know the technical term, but it looks like someone dramatically saying hey gurl with their hands in the air). This is generally a bearish sign as well. I anticipate us to fall to the next low level by tomorrow (between 447 - 443) and consolidate a bit before either making a bounce upwards or continuation down.
I expect heavy bearish volume on Thursday after the results of inflation are announced.
UNRELATED TIP
The market is extremely volatile and choppy. I almost stopped out multiple times today for no reason, just because of the chop and weakness displayed. If you are like that as well, the best thing to do is to just plan out your plan, plan your entries. Make your entries when your setups arrive and set your stop outs and take profits automatically and walk away. This is usually what I do, because I know I don't have the stomach for the volatility we are experiencing. But today, for whatever reason, I decided to sit and watch it. HUGE mistake. The most anxiety I have ever had in life.
Be careful in this market. SPY particularly is dying and its not doing it with grace. Its kicking screaming and trying to drag people down with it. Don't let it be you!
Take care and safe trades everyone!
As always, I am happy to answer any of your questions!
All jokes aside, the reality is today was a hot mess and SPY was full of both bear and bull traps for intra-day traders.
My levels I was watching were:
Anticipated Open: 446-450
Actual: 449
Anticipated High: 453.07
Adjusted High based on Open Price: 451 (Projected Resistance)
Actual: 450.99
Anticipated Low: 447 followed by 443 if 447 to be broken.
Adjusted High based on Open Price: 447.04 (Projected Support)
Actual: 445.85
My support level was respected based on adjusted low. I got long at this point (got a little scared and almost got stopped out consistently). The biggest trap for SPY today was around 1 pm to 2 pm. I saw huge volumes of put contracts being sold as it really looked like SPY was going to fail, but I figured it was a trap. The only thing that stopped me from just taking my profits there was, it usually only happens once a month that my Adjusted High is wrong. Even on the most bearish of days, SPY will test my adjusted high at least once (And most of the time, exceed it). I ended up not waiting for the full move, I got out around 450.05 because at that point SPY was just playing games with people and I wasn't here for it.
Verdict:
I mean, is anyone still fooling themselves that SPY is bullish at this point? I think it should be very clear that SPY is very weak.
The fast sell off at the end of day was actually a little surprising, to be honest. Wasn't expecting that, but yeah, it just sort of puts the nail in the coffin.
Anticipate further consolidation tomorrow into Thursday when the news is announced about inflation.
But we all know what the verdict is on inflation. Its a problem. I have already read articles comparing now to the 1970s. I URGE ALL OF YOU to look at what SPX did in the 1970s when inflation ran rampant like it is today. Also, a really interesting Tidbit of the 1970s is that there was also mass worker shortages. The economic situation then is very comparable to now. So let's pay attention to that. Stop looking at the 2008 financial crisis. That is later down the road. First its inflation crisis (SPX from 1970 to 1979). Then its government intervention to curb inflation (S&P/TSX Composite Index 1980 - 1984), then its housing market crash (S&P/TSX Composite INdex 1990 - 1992) then housing bubble burst and national economic crisis (SPY and SPX 2007-2008). Check those indexes during those time frames to get an idea of how the market will react ;). Remember, those who forget history are deemed to repeat it. But you need to look up the correct history. 2008 financial crisis is not our situation yet. It will be, I am sure, but not yet. Right now its just inflation crisis.
My position:
Long 5 call options dated Feb 14th 451 strike.
Bought @ 11:45 ish, sold @ 1435 ish.
Still Active: 10 puts (original number was 20, but have been scaling out), expiry March 31st). Hoping to exit completely by Thursday.
Levels for tomorrow:
Look for resistance/highs around 450 ish. SPY's inability to make any of my projected high targets today (mind you it was off only by 0.01 cents from my adjusted high, I will let it have that ;)) mean that we may not see this level, but this is adjusted based on SPY's weakness today.
We could see lows around 442.
Keep in mind, SPY had below average volume today. This likely threw off these previous projections which ultimately may be leading to conflicting ones tomorrow. This is why I always do corrections based on open price!
SPY is also doing that HEY GURL pattern (I don't know the technical term, but it looks like someone dramatically saying hey gurl with their hands in the air). This is generally a bearish sign as well. I anticipate us to fall to the next low level by tomorrow (between 447 - 443) and consolidate a bit before either making a bounce upwards or continuation down.
I expect heavy bearish volume on Thursday after the results of inflation are announced.
UNRELATED TIP
The market is extremely volatile and choppy. I almost stopped out multiple times today for no reason, just because of the chop and weakness displayed. If you are like that as well, the best thing to do is to just plan out your plan, plan your entries. Make your entries when your setups arrive and set your stop outs and take profits automatically and walk away. This is usually what I do, because I know I don't have the stomach for the volatility we are experiencing. But today, for whatever reason, I decided to sit and watch it. HUGE mistake. The most anxiety I have ever had in life.
Be careful in this market. SPY particularly is dying and its not doing it with grace. Its kicking screaming and trying to drag people down with it. Don't let it be you!
Take care and safe trades everyone!
As always, I am happy to answer any of your questions!
Premium indicators and content have launched! Get access at: www.patreon.com/steversteves
Anticipated Low: 447 followed by 443 if 447 to be broken.
Adjusted LOW based on Open Price: 447.04 (Projected Support)
Actual: 445.85