Thursday Dec 7 2023 SPY SPX ES Actionable Levels

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In yesterday’s letter, I wrote:

This is what happened. Overnight, we rallied and then after multiple defenses of the 4575 level, we launched up into the open to 4590.74. Rejected right at the 4590 level and it was all downhill from there. After losing 4575 we chopped around and the end of day sell put in a bottom of 4546.5 and a close at 4549, just above the 4548 level.

See how well the levels work?

Now that we’ve given back yesterday’s move and the move higher overnight and closed right at the all important level, where do we head from here? We are at the very bottom of this range, do we defend again or do we break lower?

More in the trade plan below.

The 0DTE $SPY 458 calls ran from a low of $56 to $96 = 71% gain.

I traded these from $63 to $94 at best sale for 49% gain. This was my only trade of the day called out in the chat. I basically traded the best chunk of this move and then it was all downhill from there. If I hadn’t traded already I would have eventually traded the short but did not want to risk another trade after a win. 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 great. We rejected the breakout at the open and then had to retest multiple levels below the important 4590 level from yesterday. Always trust the levels!

Now we are sitting in AH right on the 4547 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.

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Trading Plan

Here is a current check of the daily:

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

Today we put in a range expansion of a higher high and lower low compared to yesterday. The doji candle yesterday does seem to point to a shift in sentiment and momentum here.

Quick volume check:

Very comparable volume to yesterday and prior 4 sessions.

Tomorrow we have unemployment data 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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