Daily Plan 5.2.24
Welcome back everyone!
First, we will cover the recap for today's session, then move on to tomorrow's analysis.
Indices:
Once again, today's session was marked by another significant event during the SPX trading. I waited patiently throughout the session for an optimal setup as both the Emini and Nasdaq fluctuated, mostly balancing in anticipation of the event. It's common for markets to stabilize before a spike in volatility, akin to the calm before a storm. Initially, buyers entered the Emini, sparking a minor rally through the swing Volume Area High (VAH) to the slightly higher swing Volume Area Low (VAL). When sellers began to dominate, I called out an SPX Put option which quickly doubled in value. However, the market then found its floor and surged, wiping out the bears. As you can observe, the price soared past the long level, triggering a massive rally. Shortly thereafter, the price approached the long target and briefly tried to surpass the VAH. At this point, I began to scout for potential short positions, having waited through the entire rally for this opportunity. The price was at a critical area on a swing timeframe known for seller activity. The rally's momentum was visibly slowing, and it struggled to reach new highs. With this in mind, I announced another SPX Put at 3.3. The market lingered at the VAH, with time decay significantly reducing the value of these options to a mere 0.20. Nevertheless, I maintained confidence in my strategy and waited for selling pressure to emerge. Within 30 minutes, sellers poured in, reversing nearly 90% of the entire rally and propelling those 3.3 contracts to an impressive 21.2 by the close. It was an extraordinary session and a phenomenal way to wrap up the cash session.
Commodities:
Oil plummeted from the short level, resulting in a significant drop straight down to the short target, where the price stabilized for the remainder of the session. This was another picture-perfect move, predicted last night, that worked in our favor.
Gold experienced a surge in buying after the FOMC conference, which was to be expected. The indices closed nearly unchanged, with Gold trying to mirror their path but ultimately outperforming them. Soon, it will become clear which market is bluffing, with one likely to collapse and the other possibly rallying to new highs. Currently, Gold is the stronger contender among them.
Stocks:
Another incredible day unfolded for stocks, with much of the focus once again on earnings. Yesterday, we witnessed SBUX plummeting directly to the short target, and today, CVS followed suit, collapsing to its own short target. This marked a significant sell-off from these two stocks, which are generally regarded as more stable companies. Ever since I adopted a long-term bearish stance on SBUX, the stock has continued to hit new lows. I called out swing shorts at 107, which was the recent swing high, and the stock has since dropped 33 points. Over 30% has been wiped off the common shares with zero Maximum Adverse Excursion (MAE)!
Turning our attention to the stocks that experienced movement in today's cash session, MSFT, AMZN, and META all enjoyed substantial rallies, boosted initially by the FOMC announcement. However, these gains faded alongside the broader indices as the session progressed. These were significant calls made last night, proving accurate on an intraday timeframe.
On the flip side, NVDA and AMD struggled to attract buyers to surpass the previous session's closing price, effectively capping the entire session's potential. AMD set its lows right at my Earnings Release (ER) target, with the highs occurring precisely at the short level. Meanwhile, NVDA experienced a sell-off right at the opening from the short level, and then once again, following the FOMC announcement, it reached another high at the short level, leading to a further decline in price.
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