Thursday Sept 28 2023 SPY SPX ES Actionable Levels

$SPX flushes hard on loss of key level then closes flat on violent rally. What is next for $SPY?

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SPY Options
September 27, 2023

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In yesterday’s letter, I wrote:

❝

“For tomorrow, ultimately we need to reclaim 4296 for longs to be back in play.

Until then, we need to hold 4261, 4255 and 4250 in order to see an end to the selling.

You could try shorting the 4283 reject or if we fail to reclaim and then lose 4273 for a march down the levels.

If we lose 4273 then that brings up 4267, 4261 and 4255/4250. There is a lot of support here so we likely spend some time working our way through or bouncing off this.

If we lose 4250 then we likely see low 4200’s (4239…)

We will get a fast rally at some point and it could be violent. Be careful getting caught in that if you are short. Just trade the proper position size and choose your entries carefully.”

This is exactly what happened. We could not reclaim 4296 and we lost 4283 and eventually 4273. This sparked a massive flush down to 4250 and failure at that level brought us to the 4239 level precisely, (4283.63 as day’s low). Then we got the violent rally that reclaimed vwap and 4273 (even 4283 at one point) that left us flat on the day.

See how well the levels work?

Now that we’ve put in this stab lower and a failed breakdown of the all-important 4250 level where do we head from here and when are longs safe again?

More in the trade plan below.

The 0DTE $SPY 425 puts ran from a low of $32 to $283 = 784% gain.

I took this trade from $67-69 to $205 for 206%. This was my only trade (albeit I had two entries and two exits). I originally entered and was able to take off quite a bit for a nice profit. However, we then got a spike that forced me out on the rest of the position. Then we lost the key level and I reentered. This was all called out in the chat and no need to try the long or trade again after a good profitable trade. 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 this last night were pretty grand. They showed clearly where we were going to get temporary support from the selling and where we may bounce to and reject again before continuing the move down. They also helped guide our exits from short positions as we could take a chunk off as we approached key supports. Always trust the levels!

Now we are sitting in AH right on the 4280 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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