Well that’s what we call a reversal of trend week huh? Going into this week SPY open at 420.89, reached a low of 415.79 and managed to closed at 444.52 with an intraday high of 444.86. For those of you who like numbers that’s a 5.61% upward move from Mondays open to todays close and a 6.99% total move from Mondays low to todays high. That is one hell of a range for one week. I know somewhere out there someone YOLO’d into spy Calls Monday and got paid bank… or most likely hedgefunds did. Today was one of the highest quad witching days options expirations with over 3.5 Trillion worth of options set to expire. With that we, however, did not see an abnormal amount of volume traded reaching only 106.4 Million compared to the 10 day average of 116.5 million.
Now that the quad witching day is over and the 2nd quarter is upon us we should see the big wigs reposition themselves for where they see the next quarter going. One thing I wanted to point out with this wild bull week we had is that the last quad witching (big wig rebalancing) was Decemeber 17th 2021 which if you remember back to December 2021 we were on the path to see ATH and we did before we feel from a high of 480 all the way down to 410 at the lows. There is some speculation that with the low volume this week and arguably many hedgefunds and big wigs caught on the wrong side of the rail road tracks that this was arbitrarily ran up this week to allow them to get out without suffering massive losses that many of them would have suffered with things expiring down in the 420s or lower. With that being said these big wigs are not allowed to reposition themselves for where they see this going over the next 4 months (June 17th). If they are still short and still see this going down we may actually see this bear market continue. However, if they are still see this going back to ATH and the bull run back on we will have our first hints of that come next week.
Many people have been complaining and pointing out how “unnatural” it has felt for SPY and other stocks to be going up the way they have on essentially no good news despite all the bad things with inflation, economy, rate hikes, etc. Even CNBC was explaining after the FOMC meeting that JPOW did not change his tone from hawkish to doveish (which is the way the market reacted these last 3 days) but he seemed even more hawkish than before. Watching the FOMC and press conference live with the PPI/ CPI data we have gotten of late there really is no reason we should have seen a 7% green move this week. Quite the opposite actually. Which does lead me back to where I believe this market moved unnaturally this week to allow big wigs to save some of their coin. If we see more red next week and we do not see a continuation of this bullish movement I do believe the bottom is not in. IF the bulls continue to come out swinging next week it is safe to say that 410 was the bottom and we should be repositioning ourselves (at least until April when we get new CPI and FOMC stuff) for the bull run. Monday and Tuesday will be very telling.
Despite opening down 0.7%, yet again another red open, SPY was able to find its bull legs again and pushed this all the way from 438 to a close at 444.52. SPY only closed +0.78%, however, saw 1.4% of bullish upward movement today. Looking at the intraday 15 minute char it is actually quite impressive yet again, that SPY managed to close today without a single FULL candle (or even candle body today) below the 8 ema for now the second day in a row. Watching the intraday breadth it was red (which indicates more sell than buy pressure) from open until about 1pm. Despite that SPY continued to climb which tells that there were some massive buy orders that came in that out weighed the smaller but large quantity sell orders. We saw a very similar pattern intraday yesterday also. I will be very interested to see where we go Monday.
Intraday we did see quite the fight at 441, however, SPY managed to pop through to negate the potential double top I called out yesterday. Todays candle closed right under the daily 100 EMA of 445.1. We have still not seen a candle close above the daily 100 EMA if over 1.5 months. Todays trend did bring the daily 8 ema back above the daily 20 ema for the first time since January 13th (mind you any significant move down will adjust that below the 20 ema so this could be a false cross). The death cross is still only $2 away from occurring but the daily 50 EMA is now running parallel to the 200 EMA instead of directly at it.
With the red channel above I see a resistance for Monday (if we are obeying the downward channel) of 446. Interstingly if we are in a bull channel using the current points we also have a high of 446 tomorrow and while its not perfect todays candle did technically reject the upper resistance of the green upward channel and failed to breakout.
While my channels are important I focus more currently on the 100 EMA going into next week and whether SPY will be able to get a candle closed above that or not. IF we fall back below the 200 EMA of 438.12 next week I will take that as a big HINT at this being a failed breakout and will look for support around 420 otherwise we will be head back to 400. Despite all this bullish movement there really still is a very strong case for how SPY will test 400 before we see 460 again. Unfortunately we are just at a waiting game now. One thing to keep in mind is that the market markets KNOW everything we do, they know all the same points and levels and they also see every single buy order, sell order, option, stop loss, etc. They are smarter than we think they are. It would not surprise me if they knew moving SPY to this level would trigger enough people to go long on calls and close their puts that they could repush this low. Only time will tell unfortunately. But also some of the beauty of my strategy intraday trading is that it really doesn’t matter what the overall trend is (definitely helpful to know…) but we just trade the chart in front of us.
The weekly chart shows a similar picture that the daily does (I added a grey channel here from January 3rds high to todays high and using January 24ths weeks lows). The weekly chart also perfectly rejected at the weekly 20 ema of 445. This to me is another sign of a potential fake breakout. SPY had plenty of room to run today and plenty of green left (only finishing up 0.78%) yet it failed to break the key Daily 100 EMA and the key weekly 20 EMA resistance lines. We will have to see where Monday and Tuesday takes us next week but there like I said is still a very real case we could touch as low as the weekly 100 EMA (402) or weekly 200 EMA (355) before we finally recover.
I was only able to trade full time 3 days this week as I was sick and with the kiddos for spring break. Overall my goal of the week was $2500 (which would be 10% for me per day) and I managed to lock in $1375 at the end of the day today. Some of the losses also came from experimenting with my new indicator also, which today I feel like I finally fine tuned and look forward to continuing to use next week. Despite only trading for about 2 hours at most today I locked in 7 trades (all green ranging from 3%-50%).
I look forward to a new week next week and a new shot at the 10% challenge.
DM me if youd like to see these posts after April 2nd when i will be no longer posting them here.
Submitted March 19, 2022 at 01:52AM by DaddyDersch
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