A Detailed Look at the S&P Ahead of Quad-Witch Expiration
The levels are clear, but it's not clear who will take control.
Last night I sent a video update on the S&P 500, taking a longer-term, zoomed out view. If you haven’t seen it, that video can be viewed here (and apologies on my snoring dog in the background! Sheesh!)
Technical Edge —
NYSE Breadth: 35% Upside Volume
NASDAQ Breadth: 40% Upside Volume
VIX: ~$27.30
Game Plan: S&P (Detailed), Nasdaq
In an environment that is becoming increasingly choppy and difficult, we need to dial back and make things simple…Simple, SIMPLE, SIMPLE!
When markets speed up, we need to slow down. That’s the only way to combat what we’re seeing right now. Case in point?
On Thursday, we said 3975 to 3080 was resistance. Where was the high? 3977.50. Then floor support gave out. For the SPY, it was “$395.50 to $396 has been resistance.” The high? $395.96.
So after a big move and sideways action, you’ve got to find the ranges and simplify things: Are we above support or below it? Are we above resistance or below it?
Sometimes it’s as simple as a fucking line drawn across your chart. Are we above that line or below it?
Simplicity is your friend.
S&P 500 — ES
I’m going to zoom in, then zoom out.
This is a chart capturing Tuesday’s CPI low at 3938.50, Wednesday range and Thursday’s range. Notice how we ran up and tagged resistance, faded hard and lost the two-day low (which was 3929).
Then we regained it and bulls had a glimmer of hope. But notice the final 60 to 90 minutes. The ES lost 3938.50 support, then the prior day’s low of 3929. After bottoming at 3905 and making a 20-point rebound (and with a $2.2 MOC buy), it could not regain the prior day’s low.
I like to call this “deliberate price action.” The ES deliberately did not regain the prior day’s low when it had every opportunity to do so near the close. That sets a tone and it’s not a very good one.
ES — Now What?
This is a 15-minute chart of yesterday’s session and the overnight Globex session in the ES.
We are chopping around last week’s low of 3883.50. With a gap-down, I could see a scenario where we fill the gap up to 3900 to 3905 early in the session and fade again.
That will be the top setup that I’m looking for this morning, is selling the early rally.
(If we clear 3905, a push up to the 3920 to 3925 area could be in the cards, which was support in the morning and resistance late near the close).
ES — Daily
As you can see on the daily chart, the ES is leaning on the last two weeks’ worth of lows in the Globex session. If it gives way, I don't really know where support comes in next. We’re already below the monthly low and the quarterly low is quite a bit lower.
Does it open the door down to 3785 to 3800? It could. That’s only 80 to 100 points lower from here. The bigger picture zone to watch is 3750, IMO.
SPY
The SPX/ES has a lot of charts above and I’ll avoid doing that for the SPY and try to keep it a little bit simpler.
As of about 8:15 ET, the SPY is trading $384 to $385 in the pre-market. In other words, a notable gap-down. If we rallied $4 off the open, it would be impressive actually. But the problem is $388.50 to $390. That’s not just yesterday’s low, but the last few weeks’ worth of lows.
A gap-fill back to this area has me looking to sell — and why not?
The bearish dominos have been piling up and this is a great Risk/Reward zone if we get there. We have a clear line in the sand at $388.50 to $390. If we regain this area, the bulls have something to work with.
But selling this gap-fill (again, if we get it) lets us know right away if we’re right or if we’re wrong, because we’re either going to reclaim and build higher (AKA, we’re wrong) or we’re going to fade from this zone, letting us get ahead in the position quickly and manage from there.
Nasdaq — NQ
One scenario developing for the NQ is an “ABC” correction back down to the low 11,000s.
That’s negated — or at the very least, delayed — if it can regain the 11,930 to 12,000 area.
QQQ
Lastly, I’ll end with the QQQ. Set to gap-down this morning, the QQQ will fill a gap it left behind in July at $287.56.
If we get an early morning rebound, keep an eye on the gap-fill from today’s lower open in the $289.50 to $291 area. That’s yesterday’s low and last week’s low, respectively.
Like the SPY, I want to see if this area is resistance or if it’s reclaimed. The bulls do not have the benefit of the doubt and are very much in a “prove it” position. They prove it by reclaiming an area that has become support this summer.
To lose it — or to be rejected by it — says bears are in control. That could put $283 on the table.
Go-To Watchlist — Individual Stocks
*Feel free to build your own trades off these relative strength leaders*
Numbered are the ones I’m watching most closely.
Bold are the trades with recent updates.
Italics show means the trade is closed.
Notes: (none)
UUP — Down to ¼ position as we hold for potentially higher prices. Raise stops to $28.40 to $28.50. Look for $30 on the last piece.
CHNG — Consider taking the last piece off at $25.75 to $26 or simply hold against a B/E or better stop and ride the trend higher. #Kudos
OXY — Opening push on Buffett upping his stake, investors can trim as we will be near B/E on the position or they can ride against a $63.50 to $63.75 stop-loss. Three strong lows to measure against last week between $64 and $64.40.
Relative strength leaders →
SOLAR remains such an area of strength.
Top:
TAN
ENPH
FSLR
LNG — never got my $150 retest & Now an absolute monster.
CAH
F
XLU
XLE
OXY
BMRN
PWR
CHNG
CELH
COST
UNH
Economic Calendar
