Submitted by DaddyDersch t3_123zjdc in wallstreetbets
I was not able to do any trading today unfortunately but caught the end of the market today to see us close. Looks like we end up with a low volume and tight $3.36 range day today.
SPY DAILY SUPPLY AND DEMAND
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Taking a look here at the supply and demand on the daily we actually put in a new supply (resistance) at 395.82. One thing to note much like the 3945 demand on futures from last week that this is a weaker supply than the other supplies like 399.07.
So this is where much like a few weeks ago when we had supplies and demands “out of order” or that “didn’t make sense” we are seeing an imbalance here right now and basically seeing price action that doesn’t make a ton of sense just yet.
With this supply (which technically since below price action is actually a support now) being established today we are now in the process of making a new demand (support) The question will be do we come back down to 393.07 demand (support) before we make a new demand…. Or more probable will we attempt to turn this 395.82 supply into a demand. The most probable scenario I see is attempting to turn this into demand which would be extremely bullish.
However, as you can see today we nearly to the penny rejected that 399.07 level. That 399.07 area remains a very strong supply (resistance) that bulls need to breach still.
SPY DAILY PRICE ACTION
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The biggest things to note today from price action stand point is the fact that we turned the daily 20ema into support now. However, we also once again failed to breach the daily 200ema. The daily 200ema as you know is a major level and that many times takes numerous days of interaction to break through whether over or under.
Bulls will look to continue to hold the daily 20ema as support and much like futures daily will look to get a daily 8/20ema bullish crossover. The last step for the bulls before a bigger run will happen is a closure over the daily 200ema at 399. If and when that happens my target will remain 405.2. However, if the bears can fight back and get us to close under the daily 20ema and most importantly under that key 395.8 supply (now support) then I would start to target 393 and possibly 390.1 support once again.
SPY Daily Levels:
Supply- 395.8 -> 399.1 -> 405.2
Demand- 393.1 -> 385.9
Support- 396.4 -> 393.1 -> 391.9
Resistance- 398.2 -> 399 -> 401.6
FUTURES DAILY SUPPLY AND DEMAND
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Now this is why I enjoy trading SPY but analyzing both futures and spy… when we look at the supply/ demand here we actually do not see a new supply being established yet on futures daily. However, there is a pretty interesting different here in the fact that SPY daily is approaching a new demand (support) being established but futures is closer to establishing a new supply (resistance).
This is where things will be more interesting to watch play out this week. We did not quite reach the 4040/4055 supply (resistance) area on futures today. That was and remains my first upside target before a possible bigger run to 4095 this week. However, if we see a red day tomorrow we actually very well could establish 4013 as a new supply (resistance) which would open up a sell off down to 3972/ 3945 demand (supports). This is where we as I said have a discrepancy between spy and futures here. Eventually these will correlate and correct but for now we find ourselves directionless.
FUTURES DAILY PRICE ACTION
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Now looking at daily futures price action here I actually have to favor a slight bearish bias compared to spy… what I am seeing here is that we closed out a gravestone doji with a rejection off the daily 200ema and we failed to get to 4040/4055 supply/ resistance. Now the one thing to keep in mind for the last 3 days now you can see we have had some pretty large wicks and all three days have closed out as dojis.
SPY favors upside continuation tomorrow while futures daily I would say favors an upside top and breakdown to 3970 or potentially 3945 support. However, if we followed SPY daily upside then my target remains 4040/4055 and ultimately 4095.
Futures Daily Levels:
Supply- 4040 -> 4055
Demand- 4095 -> 3972 -> 3945
Support- 4000 -> 3988 -> 3972 -> 3945
Resistance- 4014 -> 4040 -> 4055 -> 4085
VIX
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The VIX continues to also point to further upside and I actually am surprised to see such a small green day of only 0.19% on SPY with such a large 5.15% drop on the VIX.
The VIX daily is now experiencing a bearish (bullish for markets) 8/20ema crossover and is attempting to break the support which sits at 20.5 for tomorrow. IF we break that support then my downside target is 19.68 and eventually 17.72 to 18.21 support area.
I do not always follow the fear and greed index but it definitely should be noted we are in a “fear” market and were in an “extreme fear” market just last week. The risk is definitely to the upside versus the downside currently.
DAILY TRADING LOG
I was gone the majority of the day today and did not get to make any trades today. I do still have some 18dte 396 calls I am holding. I was not around at open which I could have sold them for about 15% looking back it appears. My upside target remains 405 for these and I wouldn’t mind an average down if we touched and bounced off 390.1 sometime early this week.
Looking forward to get back to trading tomorrow and operations as normal tomorrow!
RGJabber t1_jdxjt6z wrote
Crazy that we were in extreme fear a three weeks ago and we only dipped into the 380s on spy for a week.
I know you said the banks could be the black swan event but it seems like the backstop has prevented that so far. Unless they let a bank fail without insuring deposits past 250k, I'm not sure what will truly take this market lower.
I'm a bear at heart buy i'm hopping on the bull train short term.