Friday Dec 22 2023 SPY SPX ES Actionable Levels

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In yesterday’s letter, I wrote:

This is exactly what happened. After reclaiming the important 4710 overnight, we bounced up near 4744 prior to the open. Then we chopped between 4722 and 4747 at the open only to eventually sell off all the way back to the 4710 must hold level.

After a quick failed breakdown to briefly dip below 4710 (low of 4708.35) and quickly reclaim, we put in the low of day and it was all up from there. Reclaiming all the level above to a high of 4748.71, just below the 4752 target.

See how well the levels work?

After the failed breakdown but still well below VWAP, I noted that that 4710 failed breakdown was significant and that we could rally hard from there if the trend in Advancers/Decliners & $VIX continued.

Sneak peek into our chat below:

Ok, it didn’t quite get below 13.5 (it got to 13.49 and then bounced a bit) but it did fall from a high of 14.49 and more recently 14.18 or so all the way back down to 13.49. This trend down in the VIX was a sign of the long case building.

Now that we put in a defense and rallied hard to end the session, where does that set us up for tomorrow? Do we fill out this range more or can we punch through the top? What does volume say and what are the must hold levels and key targets above?

More in the trade plan below.

The 1DTE $SPY 473 calls ran from a low of $39 to $145 = 272% gain.

I traded these from $113 to $140 for 24% gain. This was my only trade of the day and I traded these prior to the move shown above. This move took place in the afternoon, I traded these in the morning. Do I wish I had waited to trade today? Yes. This long setup after the failed breakdown of 4710 was not only the cleanest read of the day but it was the best entry for gain. Is it good that I didn’t trade after taking a win? Yes, that is how I remain consistent. More in the trade recap below.

Below, we’ll cover the actionable levels, how I played them today and what they mean for the next session.

Levels from the prior letter were spot on. Even during the chop they gave us clean levels of support and resistance. Then when we put in the failed breakdown and bounced hard it was easy to see the trend up. Always trust the levels!

Now we are sitting in AH right on the 4743 key support level. What does this all mean and where do we go from here? Read below for my trade plan which includes actionable support & resistance levels, outlook for the next session and today’s trade recap.

Learn the system to make 1-3 low risk, high reward trades per day using SPY/SPX options.

Trading Plan

Here is a current check of the daily:

This includes all the way back to 3/30 & all overnight action.

We have made good progress on reversing yesterday’s sell and filled out this range a bit more.

Quick volume check:

Today’s volume matches yesterday’s almost precisely. Tomorrow I would expect t one much less barring any kind of major news event.

Tomorrow we have PCE and income/spending data prior to open and consumer sentiment, inflation and home sales data after the open.

As readers know trading after a massive move in either direction is risky.

Trying to predict when trend will break is a fool’s game because the trend can be stronger than you ever realize.

Going with the trend is hard because it has already run so far (or dropped) and move may be close to over.

All you can do is pick your entries carefully and with proper position sizing. Trading out 1-3 DTE or further also helps soften the blow.

Yes it will decrease the amount of profit but will greatly help keep you in a trade long enough to see return.

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