DaddySawbucks

SPX Finding Support at upper channel boundary; retest ATH?

TVC:SPX   S&P 500 Index
Getting higher lows and support inside the narrow wedge channel at and above 3095. This can break anytime, but it looks and feels like we could get a retest of ATH price at top of channel before it rolls over, to give a double top . RSI and volume diverge but often get the retest on low volume and relatively weak price action.
Hanging on to my seat atm, watch, wait!

Fridays have been bullish for months...! We do have a gap down to fill, these seem to be governed by an 'invisible hand' that requires fillage!

This isn't advice; just a probably useless speculative observation. FGS be carefull out there, trade at your own risk!! GLTA!!!
Trade active: Closed the gap. Entered 5 contract straddle in bear spreads on DIA, IWM; but holding the bull spread on SpY. Expect EOD short covering on this intraday rally- the bear action of 3 sessions may be running out of selling power atm.

Past tops have all been double tops with 'twin boobs' chart pattern; let's be patient!
Comment: Added bear spread on QQQ 31 Dec 202 vs 22 Nov 201. If it breaks will force a rollout. If it bulls Friday keep a juicy fat premium on short leg.
Comment: Yep here's the short covering right on schedule. Brokers are forcing liquidation of shorts on PM squeeze!
Trade active: Closed calls in the AM rush and rolled into puts. Trading the 31 Dec contracts. Hedging on 29 Nov weeklies $3 OTM strikes.
Comment: Appears to be rejecting at lower TL; of course it can always rally but this appears to be a good R/R entry for short positions; so I shorted QQQ/IWM/SPY/DIA and added Jan $15 VIX calls to my high risk portfolio. GLTA!
Comment: Look back at previous peaks. Time spent hovering near the ATH is ~ 2 weeks, 10-12 sessions. We peaked on 19 Nov. Expect throwover in early-mid December. There will be rallies to lower highs along the crest of this high price ridge.

Don't bet on this using weeklies! Get 30-90 day contracts, or trade ETFs.
Comment: Looks like rotation out of NQ and FAANGs into DJIA Blue Chips. We see this before a break- shuffling shares.
Comment: We got ~62% retracement in SPY and NQ from the AM selloffs; making a 4th day of Hung Dojis. Sellers have not yet entered the market in force, but distribution begins.

Pure speculation what direction will resolve on Monday. Be prepared for another creep up towards ATH. Might get a series of 'speed bumps' before correction.
Comment: EOD short-covering rally, redux. Aftermarket lift in futures is typical of risk-off covering before weekend, does not indicate direction for Monday's opening price.

Short weeklies wilted into the EOD rush, so I rolled em up for a credit and netted ~60% gains on some of these (shorted in AM for .60c or even .80c, covered in PM for .25c or .35c, , etc).

When I woke up this AM contracts that I sold Thursday for as much as .83c were trading in open for between .03 - .08c, I closed em all and shorted more that went in half over next three hours; I cannot stress enough how no one reading these pages should be trading dailies as long contract positions, the R/R is terribad, you WILL lose most or all of your money, most of the time!

About one in ten trades you will bring in a win, and one in twenty will scalp a killing. The other 18 times you lose... MOST OR ALL OF YOUR MONEY!!

People wonder, "Why even pay 0.03c for the lousy things? Why not let em expire?" Because you got to hold them all the way to close and a lotta things can happen in six hours. I've seen 0.07c calls on UVXY jump to over $2 in an hour. Better believe I was pretty mad about failing to cover those! "I'll just wait till they go under a nickel and cover them for 3c!" I told myself... LOL. You got to look at what you can still get from them (3c) vs what they could cost you ($3 or more!), its useless to hold a threepenny contract and expose urself to unnecessary risk. When you take 80% or more out of them, it's time to roll out and move along. This is ESPECIALLY true if you are SHORT options. FGS cover the damned things when they go in half or less! I dd a lot of verical call and put spreads and nearly lost my entire life savings AND entire future life earnings; when these move ITM you're gonna get an exercise and the margin call can be more than your entire net worth.

E.g.: You short 100 SPY 320 calls and buy 100 330's in a $10 vertical spread. Suddenly the Great Donald tweets; "We have a Deal with China! Pres Xi is a nice man!" and BAM the index jumps instantly up to 328; now the short calls you wrote for .50c are $8, but the OTM calls you bought for .10c are STILL OTM, worth only .45c; you are out 75,500 USD instantaneously. Worse, if you can't afford to buy these back you will be subjected to exercise and must deliver 10,000 shares of SPY for USD 3.2 million. No kidding and brokers will let you so it for as little as 10K margin deposit.

Pls give urself time to be on the right side of a trade- options depreciate exponentially in their last 30 days! Any contract OTM on expiration day will 95% likely become worthless by COB, why take that chance?! If you want to day trade options, trade the NEXT series expiration date, not today's! If you're wrong, you will lose ALL ur money in a few hours, game over then!

Well that was a dreadfully tedious blog, kudos to u if you got to this bottom line, LOL, GLTA!

Comments

Excellent advice! I recognize the voice of experience- it’s the lessons you pay for you don’t forget. Cheers
Reply
Good work. Mr.Sawbucks.
You appear to be reading the market waves correctly, at the moment.
But as you know, things can change in a heartbeat.
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DaddySawbucks The_Unwind
@The_Unwind, Ty; it appears to be unfolding predictably, which always makes me nervous; setup for rejection from TL. Added Jan $15 calls.
Reply
Don’t put yourself down, your pages are good
Reply
@dRends35, Ty bro much appreciate kind comment! This beast has been a roller-coaster wild ride.
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