Daily Plan 7.18.24

Welcome back everyone!

The best way to start this newsletter is by reflecting on the previous one. I delved deeply into the VIX and discussed the ongoing volatility compression. There is a clear downtrend in the VIX, which recently saw a pop above the trend line, indicating a potential shift towards further downside. To confirm this, tomorrow's session must close lower than today's session on the E-mini. Additionally, the VIX needs to make a new high for the day. Both conditions are essential; otherwise, a reversal is confirmed, which I believe is currently happening.

I sent updates predicting 5650 as a key support level, and the price remained at that level for nearly the entire session. This level was not only supported by the volume profile but also by option flows. There is a clear rotation occurring that wasn't apparent on the first day but is now much broader. Initially, the Nasdaq started breaking correlation, and now the E-mini is doing the same. Weak stocks during the year are rallying while the strong stocks are selling off. Small caps are rallying off the lows as the institutional flight to safety is now under attack in the average summer cycle.

The frustrating part about today was that I was one session late in calling the large sell. I saw little follow-through on the short level yesterday and had Puts called out in chat to capitalize. Most of my subscribers have seen my perspective on how the main moves are relatively happening overnight rather than during the cash session. This means the overnight session sets the direction, and the cash session leads to price grinding in that direction.

Outside of this, there is nothing more to cover as I have provided my stance into the end of the week. Now, all that matters is how the price moves in terms of the levels posted below.That’s all for tonight, time to get to the analysis for tomorrow.