We took it out today, but closed above it. But I do believe that whatever support was there is at least depleted now that we have traded well though that level. I don’t see much more support until around 425.
We are now well below the 10/13 low. The early October lows are only 1.5% away and if we break those then we establish a downtrend from late July and the seasonally positive month of October goes negative.
Oh wait. Actually, October went negative today based on September’s closing price.
The following chart is my view of support/resistance levels on SPY:
The top horizontal line was the 10/13 low that I started watching a couple days ago. Recent trades through this line causes support/resistance to go away because any traders who were waiting for this price to take any action (buying or selling) are depleted. The next major support line I see is around 425. This is because as I look to the left, I see more trades that occurred at this level. Typically the more people who bought or sold at a specific price, then the more meaning that price has to these people. So as you look to the left, you can see going down in price from today’s level, that there is more color starting at about 425 and going down to about 420. This tells me that 425 could be support. This also tells me that the movement will not likely be as fast between 425 and 420 as it might be before I get to 425. Of course, this is all things being equal (which they often are not). Generally speaking if you look to the left and see less activity at a price range, then the stock price can move through that range a bit easier. This is why often when a stock breaks to all time highs, it can vault significantly higher on the breakout move because it is in a price range with zero past volume.
1 Like
Whether they were equal or not, it appears that SPY’s action through this range was pretty much what I predicted on 10/19. We dropped pretty easily down below 425 but then we were stuck trading up and down basically between 425 and 420 but finally broke below 420. Here’s a bit longer term chart than I posted before with the same horizontal lines for 425 and 420.
At this point being clearly below the early October lows we have an established downtrend from late July. Also, looking at a longer term daily chart, it now no longer looks like the action from this summer is simply a flag consolidation on the way to a higher 52-week high. In fact the action from June appears more like a head and shoulders top (not that I really ever rely on this pattern).
1 Like
Yes, yesterday was a positive, day, but not really enough to change anything. Other recent days that were very similar, 10/16 and 10/24, also didn’t really change anything. We are currently challenging the April consolidation range and if we break down from there, then we are looking at March and December lows.
I still have a bearish bias, but I also know that we could turn positive at any time. I played one put yesterday on SPY that stopped out for a small $30 loss. Some of the most powerful rallies occur in bear markets due to the volatility that exists in bear markets.
1 Like
Unlike the last two times, there doesn’t seem to be much reaction to FOMC so far today. Of course, we are still waiting on Powell.
re: SPY / SPDN
Charts don’t lie, people do.
Simon Sez III
Tetter Totter
9 for 9 successful trades with ZERO losses sofar this year. 2023. Then 2022 12 for 12 Successful trades with ZERO losses.
Up the last 4 days.
Divi’s pay well Quarterly.
SPDN 10 for 10 with ZERO losses.
Quill - A poor church mouse scratching for a living as a Swing Trader.
I’m watching AAPL. Last time, AAPL beat estimates but still got clobbered. I’m wondering if this happens again. AAPL is arguably what started the S&P (SPY) downtrend in early August. If they get clobbered again this time after beating estimates on the top and bottom line, doesn’t seem like that is going to be so good for market psychology. So many TV pundits have been predicting that earnings will be good this earnings season. What happens if the market says “so what?”
2 Likes
re: AAPL
re: COST
re: V
re: AJG a forever stock.
re: SPY / SPDN - buying SPDN since 11/06/23 via Tetter Tottering, just in case a recession springs up out of no where.
How much money is be wasted by just watching. Swing Traders execute per Simons two (2) simple rules e.g. AAPL. In on 10/27/23 @ $168.07 and we wait for the next SELL signal. Dems are the rules.
Quill - a poor church mouse scratching for a living as a Swing Trader.
Quill,
Here’s how I’d chart APPL when OCT 27 --your entry day-- is at the hard, right-hand edge of the chart. (My rules wouldn’t have let me get in until the following day at market open.)
after almost ten days of a rising market trend, do you think that we are about to see some red for the weekend or will Powell’s talk today keep the market rising? Its interesting to ponder such things…doc
2 Likes
I love this chart because what I see is that the SPY is at the top of its expected move for the week and should head south now. What really happens is anyones guess. I was looking at the heat map for the different indexes and when I looked at the Russell it was apparent that all the activity is in the 7 big stocks that dominate the market and all the other sectors aren’t doing much right now. Do you look at those heat maps? It was telling that this upward trend is tied mainly to the FAANNG MSFT type stocks IMHO…doc
Doc,
Yes, a better proxy than SPY for what’s really happening in the broad US economy is RSP, the equal-weight version of the SP500 index.
Another chart template I’ve been working on is this.
The huge advantage HA bars offer over hollow candlesticks is the former make the trends obvious by filtering out a bit of the daily noise. Their downside, of course, is they filter out a bit of the daily noise. Hence, entry and exit signals become a bit delayed.
But when stocks and stock indexes are plotted with HA bars and then the runs of red bars or green bars are counted, it’s rare to see runs that exceed ten bars before a trend reversal occurs.
1 Like
Arindam,
An excellent chart again with just two (2) simple rules to trade by.
Almost impossible to lose money. The hardest part is waiting and waiting for the next signal to appear. If you lose any money other than a buck, you will get detention and write on the white board 100 times the rules. JUST KIDDEN.
Quill -
1 Like
Quill,
Nobody gets dentenion if they follow the rules, but lost some money. That’s just part of the game. But losing a lotta of money, OTOH, is inexcusable, and it means the rules were not followed. That deserves dentention.
I’ve been demoing WeBull’s platform. The charts are hard to read, but they can be traded off of just by cliceking on them. So that’s a plus. Just discovered, however, that penny stocks (aka, sub-$1) can only be bought in round lots. That’s a bummer.
EDIT. WeBull’s platform sucks. I missed a $0.30 move in ALB because their order entry is so hard to navigate. That, and they don’t report bid/ask unless you buy a data subscription. ARRGH. It’s back to IB Lite for me, though I also need to check out what Fido offers.
ANOTHER EDIT. Switched over to IB Lite. Still some navigation hassles to work out, but did four buys. ITM on palladium and pills. Scratches on nat gas and the silver miner juniors.
1 Like
Hey, Doc. I’ve been out most of today, but I’m not totally sure what is happening. We gapped up at the open, taking out the 10/17 high which finally begins to establish an uptrend. But the uptrend is not really established until we have a higher low and then go above today’s high. What doesn’t look good is that we set the high at the open, then trended straight down all day. If we keep making lower lows today and close near the low of the day, that will look really bad for the market. We did not significantly break the 10/17 high. If we go down from here then you have to say that all we did today was establish a double-top.
Here’s a 60-minute chart that shows this situation. I don’t use 60-min most of the day, but I refer to it on occasion to see overall patterns. It still makes me feel like SPY is about to roll over. I just wish it would have done it earlier for my trade. Actually It’s me who should have been more patient on my entry. This morning would have been much better.
1 Like
Doc,
I think ‘heat maps’ are entertainment, not actionable info.
2 Likes
Another thought and perspective to help confuse the issue:
I am not a permabull, but remain optimistic in general. None of which stopped me from taking profits in TQQQ and several other positions two days ago. And yes, the 438 level is key, but a small breather after the recent gain is not too surprising. The anticipation is that we may drift down to the 430ish range (or even stay flat) and regain the uptrend. This is simply a watch move, not a panic. Speaking of which, the VIX ticked up but only slightly. What happens in the next few days will be illuminating.
Play it however it let’s you sleep. You have to decide for yourself. Oh, but don’t forget that next week is OpEx Max Pain week. 
Lakedog
2 Likes
I really like the information from your chart Lakedog because it shows that the SPY broke above its expected move which could portend a continued move up or a drop back down into the expected range. Since its Friday, I am anticipating a move back down this afternoon since the last few weeks its looking more like bear flags. These charts that you all follow are so interesting. I wish I could figure out a system for trading options off these charts LOL…doc