NaughtyPines

SPX500 POST-200 BREAK CONFLUENCE LEVELS

FX:SPX500   S&P 500 index of US listed shares
While I primarily trade volatility and not direction, I remain interested in various levels of support/resistance in SPY             and its counterparts ( SPX             , SPX500             ). This is not so much to inform my options setups (since they are governed purely by the statistical likelihood of an option expiring out of the money), but it can play a role in reassuring myself that particular strikes of a given setup are clear of certain support and resistance and make me more confident in the outcome that the statistical probabilities dictate.

For me, it helps to identify Fib levels that are confluent across time and price action. In this particular case, I have drawn Fib retracements lines from the swing high at approximately 2132 to the swing low at 1872 and then from 1872 to the swing high at 1998. Several confluent areas between the drop from 2132 to 1872 and the bounce from 1872 to 1998 stick out: (1) ~ 1935; (2) ~ 1970; and (3) ~ 2000.

The confluence level at 1970 was tested on 9/8-9, after which price tested 2000 (9/17-18) which is the .50 Fib from the 2132 high to the 1872 low, thereafter retreating, briefly testing 1872 via wick on 9/29. 1935 was arguably tested from below on 9/8 and from above on 9/9 ... .

Unfortunately, these levels don't help me discern where SPX             goes from here; price is but slightly above the .50 Fib from the 1872 low to the 2000 bounce ... . What I do currently know is that buying interest has appeared at approximately 1872 and selling interest at around 2000, and that gives me some confidence that -- at least for the time being -- setups with short calls above 200 and short puts below 187 make some inherent sense ... .
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