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What we’re reading:

In yesterday’s letter, I wrote:

This is what happened. I was even asked in the chat if I thought we could get down to 4936 and I said it was possible, but I didn’t think it would happen. Then we continued down hard in the afternoon!

See how well the levels work?

After the first sell-off in this long rally, where do we head from here? What key levels need to be reclaimed to turn this around and what levels show us we’re going deeper?

More in the trade plan below.

/ES ran from a low of $4961.75 to $4988.25. That 26.5 point move at $50 per point would equal a profit of $1,325 per contract.

I traded a lot of this move up. First, before this move I traded overnight and had a partial exit for a small 5pt gain but the rest stopped out for a loss. Then I was flat heading into CPI. Once we lost the key 4933 SPX level I briefly traded the short but I felt I had missed most of the move down (if only I knew what the afternoon would bring!). Then I traded 4969 to 4976 long before the open. After the open I had a horrendous entry into long ES. Honestly it was too early. I then added at 4971.75 and exited on a small bounce. I added longs on defense of 4946 SPX level and caught from 4981.50 to 4987. This is when I should have shorted. Instead I watched and finally did enter a long dated call option. It was up substantially by the close but the price action into the close had me keep it overnight! It expires 2/24. 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. A big move for CPI. When we lost the key must hold level we knew it was going to be down, just how far was the question. I should have caught the short again after the bounce and should have trusted the plan above that we could have reached the 4936 target to the downside. Always trust the levels!

Now we are sitting in AH right on the key 4960 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.

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Trading Plan

Here is a current check of the daily:

This includes all the way back to 6/29 & all overnight action.

Big sell off on CPI. We lost the gains from the last few days but we did defend the top of the prior range. This is key and if it holds it can prevent further downside.

Quick volume check:

Of course we are going to get the big volume on a day like today. 2nd highest volume this year. Know what #1 was? It was a major sell much like today that defended and rallied all of the sell and more the very next session!

I am receiving some great questions from beginners. This is helping me develop guides for this group as well as the course. More to come but I’ve created a separate channel in the discord just so you can not be shy about bringing those questions to the group. No question is dumb, we grow stronger together!

In fact, I’ve created this single resource as a guide. It is a living document and we will continue updating it. You must be logged into the site to read it:

https://letter.spyoptionsactionablelevels.com/p/strategy-guide-the-basics

Tomorrow is pretty light in terms of events and data. Largest is likely a Fed Member speech.

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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