Thursday Oct 26 2023 SPY SPX ES Actionable Levels

$SPX breaks down after critical levels are lost. When does the pain end for $SPY?

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SPY Options
October 25, 2023

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In yesterday’s letter, I wrote:

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“We are still in a strong downtrend and until we reclaim the…

If the low is not in, then we will test and lose 4222. This would be a good short if we break by 4-5 points below, accept the loss and then bounce. This bounce (but remaining below 4222) would be a short entry.

First we will see 4213, 4204 and 4195.

On volume we could even see 4188, 4180...”

This is precisely what happened. We lost the critical 4222 must hold level and it was all downhill from there. We even ran through all the above levels and bounced right off the 4180 (low of 4181.42).

See how well the levels work?

Now that we’ve lost the low from last Friday and punched an even deeper hole, how will we know a bottom is in? What key levels will guide us?

More in the trade plan below.

The 0DTE $SPY 422 calls ran from a low of $20 to $97 = 385% gain.

I entered twice at an average of $68 (lowest was $60) to $95 at best sale for 40% gain from the $68 average. This trade was called out in the chat and unfortunately I wanted to enter long much earlier but due to some CBOE issue with quoting I could not on ToS. Then, I didn’t trade the better move after we finally lost the critical 4222 level because I already had my win for the day. Oh well, rules are rules. 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 last night were strong. They clearly showed support (and I traded this to the long side for a bounce higher after the open. They also indicated resistance and when I took my best gain on the long side (when we were testing 4222 must hold level) and when we lost this critical level we knew where we were headed. Always trust the levels!

Now we are sitting in AH right under the 4193 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.

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