Thursday Dec 21 2023 SPY SPX ES Actionable Levels

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In yesterday’s letter, I wrote:

Today was a tale of two moves. First, we did not retest 4746 overnight & was able to rally from 4756 at the open to 4778, just shy of the 4781 target.

Then after chopping near the highs we really started selling off in the afternoon. First losing 4746, then 4722 and hitting a low of 4697.82. Just 1.18 off the 4699 downside target.

See how well the levels work?

Now that we have put in a red day, selling off the move from the prior 4 sessions, where do we go from here? What must hold levels below and key targets above point the way?

More in the trade plan below.

The 0DTE $SPX 4755 puts ran from a low of $15 to $5600 = 37,233% gain.

I traded these from $55 to $125 for 127% gain. This after trading 475 SPY calls that I called out in the chat for 63% gain. I hadn’t planned on trading again, but I tempted myself into doing it (not calling it out realtime), then backing out and then watching them explode. Hate watching something trade for 10, 20, 40 or 50 times what I just sold it for! 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 fantastic. They guided my entry into calls in the AM and into puts in the afternoon. Should have had the conviction to hold longer. Always trust the levels!

Now we are sitting in AH right on the 4705 key resistance 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.

A higher high and a much lower low. What does the volume say?

Quick volume check:

Yesterday I warned that these are the conditions that are ripe for a violent reversal when volume picks up. This is exactly what played out today - take 1/5/10 min chart and see when volume picked up? This built momentum and sold off hard.

This is why we see a higher volume on the daily today compared with prior two sessions.

Tomorrow we have GDP & unemployment prior to 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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