Recap:
Calculated trading range for last week was 387 – 423. We remained range bound in this range all week (see chart below):
SPY did show some subtle bullishness, but it was quite balanced, we still remain within the SD range that we finished in the previous week (see below):
Friday was kind of a cluster day. In reviewing it with my hindsight bias I am actually relieved to see that really it was not a good day and not a day to really day trade. There were some “catalysts” that could have been the cause of that day, notably Amazon and some bad news with AAPL. But you know, at the end of the day, big news matters for 1 whole day and then the stock resumes doing what it wants to do.
Friday reminded me, as much as I like to think I am neutral towards things, I am not LOL. I got too excited about seeing that 420 pop up as the bullish break and I was just like “IT’S A SIGN!!” so in the morning, despite my sentiment analysis being bearish and despite this taking out the bearish break essentially at open, I was a little too long biased.
If you look at the chart above, those arrows indicate price targets (Red means predicted bearish target reached, yellow means neither target and just consolidation and green means predicted bullish target reached). When a stock breaks my bearish or bullish break and upon sentiment analysis, I follow my indicators price targets to the direction the stock is moving (bearish or bullish). On a stronger day, we will generally hit 5 out of 6 targets. On a weaker day we will hit around 2 to 3 (in either direction). On indecisive days and conlsidation we will generally hit 4, 2 on the bearish and 2 on the bullish. We hit 3, 2 bearish and 1 bullish. SPY did not maintain consistency throughout the day and showed a real reluctance to sell off despite hitting that bearish break. This makes me think that SPY is a bit stronger than expected, but at best all we can call Friday is indecisive consolidation.
Overall super annoyed. Had losses and also wanted to begin re-scaling into a short position on a touch of 420 but we never got it so I never was able to follow through with my plan.
Next week, in SPY:
SPY is in a pennant type structure. Its quite confusing to look at and you can interpret this as an extremely bearish and hideous looking chart. But really, if we look closer, more so we look on the 4 hour chart, we can see something interesting:
That, that is another one of my own personal chart patterns (I say this but it very well could be someone elses already identified pattern). It’s a cross between the batt pattern and my other pattern “the bird pattern”. If you read my other ideas you will be familiar with my bird pattern. A strong bearish indicator I noticed during the 2018 sell off.
This pattern on the other hand, I call it the Graceful Pigeon, generally only seen with AMD but now I am seeing it with SPY. It’s a pretty bullish pattern. AMD does it a lot, it does lead to some failures but my experience playing them to the long side has been great. I will show you some examples below:
Graceful Pigeon Failure (AMD):
Graceful Pigeon Success (AMD):
To be fair, I have never seen this pattern with SPY before. So I am looking forward to seeing how this plays out. I suspect it will fail because we are getting to that capped area (422 – 430 range). But I anticipate at least some continuation of the fluttering wing prior to failure to bring us up to that 422 area.
Time Series:
Time series hasn’t changed really at all. Still saying we should be entering back into the 300s sooner rather than later. Essentially we are slightly over 1 week away now (1.5 ish weeks) from when this timeline projected us to be around the 371 – 380 part. We accerlate and then pull back, and then accelerate again a little further and then pull back. SPY has been quite aggressive and annoying with its moves and respecting its timelines, so be careful when swinging as always. Give yourself enough room and be prepared to be caught in aggressive pullback in either way.
Trading range:
Next week’s calculated trading range, again using SAS and drawing from a bigger emphasis on last week’s behaviour, is 400 – 421.
I am hoping that SPY makes a break out of this pennant/bull flag it is forming on the daily.
Bullish and Bearish Breaks:
413 is the bullish break and 408 is the bearish break for Monday.
I got some questions about the bullish and bearish break. I will just clarify here what this means. The bullish and bearish break are a probability/conditional type assessment. So these do not, in and of themselves, lead to trades, they just signal to the trader (me) that a certain level has been broken and this level has shifted the probability in favour of a continuation down or up. So it signals to me that, say the bearish break is broken, the probability is not on my side to go long. I will have to be in and out quickly if I decide to go long because the odds are against long positions here. Vice versa for bullish break. BUT! I do not wait for these breaks to happen before trading. Right off open, based on a combination of chart patterns, RSI, Z-Score and my new invention of sentiment analysis (which provides me with proportions that try to measure the degrees of bearishness and bullishness based on things like volume, put/call ratios/ previous day ranges, etc.).
Many times, like this week, when we are range bound, we will just stick between the bullish and bearish break. But once a bullish or bearish break is taken out and crossed, I will then drive my price targets from my indicator in the appropriate direction (bearish break will look to my indicator’s bearish target and vice versa) and then scan the 1 minute and 5 minute charts for an entry to this price target.
Sentiment Analysis:
Running some hypotheticals, it really will depend where this opens. I am getting kind of mixed results depending on how this opens. So let’s reserve any speculation on this until at least tomorrow evening when futures opens.
My thoughts:
So looking at the numbers, running some hypothetical sentiment analyses for Monday and looking at the chart, I am slightly confused about what to expect. I am concerned about the weakness that is evident in the Zscore chart (see above). This area is actually acting like hard resistance on SPY (the -2 to – 1 range). But I really think that SPY will want to re-test -1 (which remains a price point of 422).
Because Friday was not incredibly bearish, (we hit only 2 bearish targets and still hit 1 bullish target), I think what this was, was technical pull-back. SPY was approaching oversold on RSI. And what are more telling were the leveraged ETFs were quite overdone on Thursday:
SPXL
WEBL:
WEBS:
So both the leveraged bull and bear ETFs were approaching undesirable ranges on RSI. So this very much could have been a technical pullback before the next leg up. I tend to believe this just because we did not get the kind of selling I would anticipate should SPY decide that “Okay, I have had enough bouncing, let’s get back to the point”. No U turn type behaviour was seen. However, it was probably just enough to fool people into jumping in short. I did notice a slightly increase in the put call ratio when inputting the data for my sentiment analysis for Monday, so that is interesting….
Overall, I believe we are still at a point where it could go either way. We know it will tumble down sooner rather than later. But whether that point comes Monday or not, is up for anyone’s guess. I will check in with futures on Sunday night, see if anything interesting appears, but usually it doesn’t. And usually if it does, it’s a huge PSYCH! So whatever. Either way, I tend to maintain that SPY wants to go a bit higher. I don’t want to fall for SPY’s tricks and games here.
As always, leave your questions comments and critiques below!
Calculated trading range for last week was 387 – 423. We remained range bound in this range all week (see chart below):
SPY did show some subtle bullishness, but it was quite balanced, we still remain within the SD range that we finished in the previous week (see below):
Friday was kind of a cluster day. In reviewing it with my hindsight bias I am actually relieved to see that really it was not a good day and not a day to really day trade. There were some “catalysts” that could have been the cause of that day, notably Amazon and some bad news with AAPL. But you know, at the end of the day, big news matters for 1 whole day and then the stock resumes doing what it wants to do.
Friday reminded me, as much as I like to think I am neutral towards things, I am not LOL. I got too excited about seeing that 420 pop up as the bullish break and I was just like “IT’S A SIGN!!” so in the morning, despite my sentiment analysis being bearish and despite this taking out the bearish break essentially at open, I was a little too long biased.
If you look at the chart above, those arrows indicate price targets (Red means predicted bearish target reached, yellow means neither target and just consolidation and green means predicted bullish target reached). When a stock breaks my bearish or bullish break and upon sentiment analysis, I follow my indicators price targets to the direction the stock is moving (bearish or bullish). On a stronger day, we will generally hit 5 out of 6 targets. On a weaker day we will hit around 2 to 3 (in either direction). On indecisive days and conlsidation we will generally hit 4, 2 on the bearish and 2 on the bullish. We hit 3, 2 bearish and 1 bullish. SPY did not maintain consistency throughout the day and showed a real reluctance to sell off despite hitting that bearish break. This makes me think that SPY is a bit stronger than expected, but at best all we can call Friday is indecisive consolidation.
Overall super annoyed. Had losses and also wanted to begin re-scaling into a short position on a touch of 420 but we never got it so I never was able to follow through with my plan.
Next week, in SPY:
SPY is in a pennant type structure. Its quite confusing to look at and you can interpret this as an extremely bearish and hideous looking chart. But really, if we look closer, more so we look on the 4 hour chart, we can see something interesting:
That, that is another one of my own personal chart patterns (I say this but it very well could be someone elses already identified pattern). It’s a cross between the batt pattern and my other pattern “the bird pattern”. If you read my other ideas you will be familiar with my bird pattern. A strong bearish indicator I noticed during the 2018 sell off.
This pattern on the other hand, I call it the Graceful Pigeon, generally only seen with AMD but now I am seeing it with SPY. It’s a pretty bullish pattern. AMD does it a lot, it does lead to some failures but my experience playing them to the long side has been great. I will show you some examples below:
Graceful Pigeon Failure (AMD):
Graceful Pigeon Success (AMD):
To be fair, I have never seen this pattern with SPY before. So I am looking forward to seeing how this plays out. I suspect it will fail because we are getting to that capped area (422 – 430 range). But I anticipate at least some continuation of the fluttering wing prior to failure to bring us up to that 422 area.
Time Series:
Time series hasn’t changed really at all. Still saying we should be entering back into the 300s sooner rather than later. Essentially we are slightly over 1 week away now (1.5 ish weeks) from when this timeline projected us to be around the 371 – 380 part. We accerlate and then pull back, and then accelerate again a little further and then pull back. SPY has been quite aggressive and annoying with its moves and respecting its timelines, so be careful when swinging as always. Give yourself enough room and be prepared to be caught in aggressive pullback in either way.
Trading range:
Next week’s calculated trading range, again using SAS and drawing from a bigger emphasis on last week’s behaviour, is 400 – 421.
I am hoping that SPY makes a break out of this pennant/bull flag it is forming on the daily.
Bullish and Bearish Breaks:
413 is the bullish break and 408 is the bearish break for Monday.
I got some questions about the bullish and bearish break. I will just clarify here what this means. The bullish and bearish break are a probability/conditional type assessment. So these do not, in and of themselves, lead to trades, they just signal to the trader (me) that a certain level has been broken and this level has shifted the probability in favour of a continuation down or up. So it signals to me that, say the bearish break is broken, the probability is not on my side to go long. I will have to be in and out quickly if I decide to go long because the odds are against long positions here. Vice versa for bullish break. BUT! I do not wait for these breaks to happen before trading. Right off open, based on a combination of chart patterns, RSI, Z-Score and my new invention of sentiment analysis (which provides me with proportions that try to measure the degrees of bearishness and bullishness based on things like volume, put/call ratios/ previous day ranges, etc.).
Many times, like this week, when we are range bound, we will just stick between the bullish and bearish break. But once a bullish or bearish break is taken out and crossed, I will then drive my price targets from my indicator in the appropriate direction (bearish break will look to my indicator’s bearish target and vice versa) and then scan the 1 minute and 5 minute charts for an entry to this price target.
Sentiment Analysis:
Running some hypotheticals, it really will depend where this opens. I am getting kind of mixed results depending on how this opens. So let’s reserve any speculation on this until at least tomorrow evening when futures opens.
My thoughts:
So looking at the numbers, running some hypothetical sentiment analyses for Monday and looking at the chart, I am slightly confused about what to expect. I am concerned about the weakness that is evident in the Zscore chart (see above). This area is actually acting like hard resistance on SPY (the -2 to – 1 range). But I really think that SPY will want to re-test -1 (which remains a price point of 422).
Because Friday was not incredibly bearish, (we hit only 2 bearish targets and still hit 1 bullish target), I think what this was, was technical pull-back. SPY was approaching oversold on RSI. And what are more telling were the leveraged ETFs were quite overdone on Thursday:
SPXL
WEBL:
WEBS:
So both the leveraged bull and bear ETFs were approaching undesirable ranges on RSI. So this very much could have been a technical pullback before the next leg up. I tend to believe this just because we did not get the kind of selling I would anticipate should SPY decide that “Okay, I have had enough bouncing, let’s get back to the point”. No U turn type behaviour was seen. However, it was probably just enough to fool people into jumping in short. I did notice a slightly increase in the put call ratio when inputting the data for my sentiment analysis for Monday, so that is interesting….
Overall, I believe we are still at a point where it could go either way. We know it will tumble down sooner rather than later. But whether that point comes Monday or not, is up for anyone’s guess. I will check in with futures on Sunday night, see if anything interesting appears, but usually it doesn’t. And usually if it does, it’s a huge PSYCH! So whatever. Either way, I tend to maintain that SPY wants to go a bit higher. I don’t want to fall for SPY’s tricks and games here.
As always, leave your questions comments and critiques below!
Premium indicators and content have launched! Get access at: www.patreon.com/steversteves
Projections based on futures and some other stocks I have been playing around with are leaning to the bearish side for Monday.
We have Amazon stock split on Monday and CPI data on Friday.
Its going to be such a nightmare, lots of money will be lost.
Be careful with your entries if you are day trading. Tomorrow is the PERFECT day to wait for sentiment confirmation via bearish or bullish breaks, or to just sit it out in general.
Stay safe everyone!