2. Second, We still have a bearish QCOM's 99% and looking back QCOM does actually seem to follow SPY/ the broader market a little bit. Not the most solid argument, I admit, but an argument none the less :-).
3. Next, its that little channel/flag that SPY and IWM are creating. Its coloured in the aqua colour. I am expecting, at the VERY LEAST, to test the bottom of that flag.
4. DSL needs to be re-tested. We broke out, but for a breakout to be sustained, we need a re-test of the DSL line which is right now around 396.
5. MSFT earnings were my immediate concern because I could see that it wanted to go to 255 and I didn't know how that would initially be taken by the market and whether it would be held. Why 255? Because of MSFT's monthly math levels. MSFT respects them (this was the basis of the failed attempt at long day trading this on Monday lol):
Didn't reach 255 exactly, but its close enough for me to feel secure in knowing that the move I envisioned essentially played out and is over now.
6. IWM. IWM tells all. It did not respond to MSFT earnings aside from a knee jerk reaction (Yes, it does not track MSFT I am aware. But it does respond to market movement to an extent and can signal "fake" moves in the market). But that's not the basis of my thinking here. The basis of my thinking is IWM's curious avoidance of its swing high range:
The setup is identical to SPY, too but the more telling thing is that IWM is avoiding the swing high range despite consistently bullish momentum. I see this when its about to do a tumble.
7. :O I thought our 78% target was unhit, but it was actually hit! Not good.... anyway, that was reason 7 but the point is now moot.
The probs:
The probs. The probs are where those buts come in.
The probs were able to identify IDENTICAL, like completely identical days for ES1!, IWM AND SPY. They are DECESIVELY bearish, but only on ES1!. Like very clearly bearish on ES1!. The probs on IWM and SPY support the thesis of a gap down; HOWEVER, they do retain a bullish undertone for intra-day trading. Meaning that, I wouldn't bet on massive tanking tomorrow. But I would except us to either gap down or move towards the lower targets upon open only to attract some zealous dip buyers.
The targets to pay attention to on SPY are the 2nd and third bear targets on SPY.
They are:
1. 398.11 (High probability; however we came close in after hours essentially hitting it); and 2. 396.36 (This corresponds roughly to a re-test of that DSL line and a test of the bottom of this little channel I have plotted out)
The targets to pay attention to on IWM are:
1. 185.80 (modest probability but corresponds to a re-test of DSL); and 2. 184.57
So yeah. Long story short, I am short. But conservatively so. There is a lot of optimism right now and so what I want to stress is be careful and don't FOMO short off open tomorrow. Because the probability doesn't support it... yet. That said, it can still absolutely sell. I am just not getting strong sell readings on the probabilities.
That said, I do expect this to be a losing battle for bulls at this point unless we reclaim the overhead trendline tomorrow.
My thoughts!
Safe trades everyone!
Note: Its that time of the month that day trader Steve is out for a bit as he has to put his NP hat on for the next 4 days, then his Student hat on for the following 2 days (never a dull moment). Soooo........ I won't be spamming Tradingview as much and will be laying low from day trading and just checking in to position myself for swings. I will be around to answer your questions though!
Take care everyone and thanks for reading :-).
Trade closed: target reached
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Closed out on open and switched to long about an hour into the morning.
I exited completely at close. Not holding into 2 major news catalysts.
Wow, very observant and good analysis. Thanks so much! I was wondering about why IWM looks kind of exhausted today. I thought maybe because the short squeezes on those meme stocks are cooling off. Have fun in school! Btw what is NP?
Steversteves
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@Faithhopecharity, Haha you're too kind with your coins! But I appreciate your feedback and really happy you find my analyses useful/helpful :-). Safe trades to you and take care!
mommymiles
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I shorted b/c we didn't break high. All the best 🥂
Steversteves
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@mommymiles, Yeah, that was another reason! To you too! Hoping for the best for all of us haha
mark32128
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@mommymiles, that was also my post last night to short since the 402.65 was not taken out before the 398.50 area broke overnight hoping that the cash market is obvious so i can hang short. However the economic news Thursday and Friday may keep the market from crashing until friday at 830am news
jluong2
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I shorted as well. Msft after hours shook me for a moment until it reversed when their future guidance tanked the market after hours. Chart looked bullish to with an inverse head and shoulders pattern playing out. I bought some qqq put options at the end of day when I saw the bull flag break to the downside on qqq. This could cascade to the rising wedge breaking down as well. Let’s see how it plays out tomorrow.
summersale2020
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stock market is a gamble , when you want to buy they make it so hard so you buy high , then they pull the rug spy , and stocks go down , then they trick you overnight and , i lost 30k , since then i cant click the buy button for the past 2 years watching it daily , but cant , i just want to recover my money thats all.
arich1282
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Do you see the macro diamond patterns forming on both spy and IWM - I've been more heavily watching IWM with this pattern playing out perfectly - not only does the one hour chart show what appears to be a double top getting held up in the same place mid November to Decembers price got held up - should be leading to next and final leg down before breaking bearishly out of the diamond with first PT being $175 - $173.90.
That being said, SPYs similar pattern price target (on a bearish diamond break) would be almost $320 on the dot (a target I have heard thrown around by many big whigs) - this level also falls into the golden pocket fib retracement of the entire move from the covid lows to ATH's.
Steversteves
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@arich1282, Interesting! I can't say that I am a pattern trader in the least. I do look at them but they are among the technical strategies I tried when I first started trading that contributed to my 50 K in losses during my initial newbie 1.5 years as a trader haha. So I generally only pay attention to what math/probability and immediate PA tells me. But, what I also pay attention to that I don't mention much because I am not a fundamental analyst and really don't know enough logistically to explain to others, is fundamentals and economics. But really the only things that I tend to focus on are math, which plots the likely trajectory, and economics/fundamentals which provides the catalyst for the trajectory.
As of right now, SPY has positioned itself perfectly that the math mapping has said "okay, this is either going to 425 or 360 in the immediate future, and I am not sure which". So right now, for me, all eyes are on the macro economics/fundamentals to help decide which direction its going to go, because the market has successfully confused my math haha.
Not sure if this is helpful. I was going to do a post about this, but just lots going on right now. But yes, there is a really nice bullish chart pattern on SPY on the weekly that i was also eyeing:
And, technically speaking, if we look at that, we should expect it to want to re-test the breakdown from DSL which would be around 410. And this is IWM:
Same sitch. So yeah, I agree, upside probably followed by rejection. :-)
TheKitchenTrader
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Great analysis. MSFT, TSLA tonight and then the monster AAPL coming. It's interesting AAPL moved their earnings back to after FOMC... They have always been in late January for something like 10 years I believe. 🤔 Would like hearing your thoughts on this?