Daily Plan 10.18.23
TSLA, NFLX, and LRCX Earnings
Good evening, readers!
What a fantastic session we had, with a complete collapse of the indices working out in our favor. Although the Emini didn't quite reach my short target, the Nasdaq certainly did, dropping nearly 300 points before finally reversing and reaching a high of day just below my short level. As expected, the rally met resistance at my upper-end Point of Control (POC) at 4222, which also served as the high of the day for the Emini, resulting in a 30-point drop and plenty of opportunities for shorts. For the Nasdaq, we witnessed a 134-point drop once again from my specified level, bringing the maximum favorable excursion (MFE) for my level to over 400 points, all within a single session! It's clear that major moves are once again stemming from the volume profile levels mentioned in this newsletter.
Last night, I covered my analysis, which outlined the weekly and monthly profiles that guided our trading plan. This analysis led to significant moves in stocks, exactly as I had anticipated, with TSLA, AAPL, and NVDA all reaching my swing short targets. As I discussed last week, I had positioned myself for a short position in the tech sector, and we've now witnessed a substantial gap down, confirming my expectations.
Here's what I posted yesterday, providing a clear indication of short opportunities while below 4422:
The level at 4410 marks the lower boundary of the Point of Control (POC) within this critical value area. It has solidified itself as a formidable resistance, and I anticipate it will continue to act as such during tomorrow's session. This aligns with the Value Area Low (VAL) on the Nasdaq, which served as resistance in today's trading. You can locate these levels in the section below, complete with the profiles for reference.
Beneath the value area we currently find ourselves within on the Emini, I anticipate an influx of volume filling in the Low Volume Node (LVN), thereby expanding the existing Value Area to the downside. Eventually, all these LVNs will be filled in. In this scenario, given the expected limited volatility, it sets the stage for a balanced market on the downside.
Of particular interest is the level at 4354, which I'll be closely monitoring as a downside target. There's a notable bump in volume here within the LVN, and it held significance in the past week. For potential long positions, I'll be looking for a break above the current POC on the upper end, situated at 4222. It's in this area that shorts may once again find themselves in a difficult position. However, it's crucial to keep in mind that as long as we remain below 4410, there's clear selling pressure that continues to cap the indices.
This overarching thesis will also apply to the stocks listed in the Daily Plan. As always, I'll thoroughly analyze the profiles on the Emini and Nasdaq, using this thesis as a guide to determine the appropriate levels for the mentioned stocks.
Oil initially reached the low of the night just below my short target and later surged to set the high of the day at my long target, effectively encompassing the entire session's range within my specified levels once again. Volume Profile proves invaluable in forecasting the upcoming volatility for all indices, stocks, and commodities, as evident in today's trading. Especially when I anticipate a balance between the Value Area High (VAH) and Value Area Low (VAL), it becomes relatively easy to identify where buyers and sellers are entering the market, with the Point of Control (POC) serving as the primary target for both long and short positions.
Gold, today, defied expectations by surpassing my long target, experiencing a gain of over 19 points after initially touching my long level. It should come as no surprise that I've maintained a bullish stance on META, and it emerged as one of the strongest tech stocks in today's session, closing at its highs.
As you continue to read through the entire newsletter and revisit the videos, you'll gradually adopt my perspective on Volume Profile and develop your own insights into what lies ahead. A fundamental aspect of order flow analysis is not just recognizing strength and weakness but also understanding when the market is finding equilibrium within a value area or establishing a new one. If you've been following me since the beginning of this newsletter at the start of the year, you'll understand where I'm coming from. I was among the few who confidently highlighted the strength of the upward trend, with no breaks in the trendline, even when others were predicting a breakdown due to unexpectedly strong data, which never materialized. As soon as inflation started to decline, there was no hesitation in adopting a long position and holding it as long as we stay within the Value Area Low (VAL) of the current value area or establish a new value area above it. This approach is akin to technical analysis with candlesticks but offers more value due to the context provided within the profiles. As the value shifts up or down, it serves as a clear indicator of the direction, and it's in my best interest to trade in harmony with it rather than against it, while avoiding any inherent biases. Regardless of your background, you'll inevitably face the challenge of bias, and it's crucial to overcome it and focus on the system being employed.
Without further delay, let's dive into the analysis for tomorrow's session!