Daily Plan 8.9.24
Welcome back everyone!
Today was a significant session to the upside, which caught me off guard. In the last two sessions, we saw selling into the close, but this completely changed today. Yesterday's puts closed out with over 500% gains, so I rolled into a swing trade for the next day's expiration puts on SPY, which unfortunately didn’t work out. There was a clear trend throughout the entire session, as we held the low at the open and never saw this price touched again for the rest of the day. In typical trend-day fashion, the price moved up, leaving low-volume nodes on the intraday profile while building value higher and higher. There is clear defense coming in on all the indices right at the 200-day moving average, where plenty of value is being built up. More often than not, the price will bounce in this area, and as of right now, this is what we are seeing.
Since the low, we have seen a short-term uptrend with higher lows. Yesterday, the price broke out of this, so the risk-reward of swinging contracts into the close for downside was logical, but the price quickly reclaimed this level in today's session. Now we stand at a critical area on the indices to see if today’s bounce will have legs. At the upper end of this week's range, I favor shorts as the medium-term trend remains down. At the end of the day, we have yet to see the price move out of the range at the lows of this downtrend.
Bulls are trying to take back control, but this has yet to happen. My focus in these scenarios is to short the range highs and hold runners for a breakthrough at the range lows. Anytime we spring up off the low, this system will take some heat, but relative to how many handles are captured by being right, you end up doing very well. So, today was a red day personally, but it was paid for by the previous session's puts. Let’s take a look at how all the indices are holding up:
SPX, NDX, DIA, IWM
Every single index is on the brink of breaking below the support that has turned into resistance. This is technical analysis 101, which can also be seen on the volume profile chart. After the sell-off, we saw a large gap down on the carry trade news, ultimately marking an area with a Low Volume Node (LVN), which will be a key resistance going into tomorrow's session. Simply put, bullish above and bearish below. In the section below, I will show the charts along with a detailed explanation of what we can expect for tomorrow's session. Then, at the open, I will be active in the chat to call out trades and identify the trend for the day.
Now let’s delve into the market structure on the S&P and Nasdaq.