Special Announcement!

If you caught my chat with Greta Wall yesterday on Conversations With A Pro Trader, thanks for watching and sending your questions.

If you missed it, here is the replay.

The Markets

Remember this?

If it moves lower we’ll still be watching the gap area around $422-$424.50

That was in reference to SPY from the Monday Market Update. Stocks moved into the target area and then gave a sequence of events making for a very nice bounce trade setup.

Things don’t always work as planned. But it’s always nice when they do. Let’s take a look at the progression and map out the steps.

SPY opened modestly higher yesterday morning and back above the March low anchored VWAP (purple line).
The gains were quickly erased as prices moved lower taking out several support levels;
- the opening low
- the same AVWAP
- the previous day’s close
- the previous day’s low

Things looked sketchy as prices moved into the gap area and hit $422s.

Then it changed.

Prices moved higher
Volume started to pick up
SPY printed a hammer candle pattern on the 30m chart

We can never be certain of how these events will resolve. But we can observe the sequences.

It’s back over the gap area
Then back above the March low AVWAP
Into the week-to-date AVWAP
Gets quickly rejected

It was back-and-forth action to keep people guessing before prices closed the day near support. We got a hammer on the daily chart as well. With a bonus in the form of a DeMark 9 buy setup.

Putting it all together

SPY had the following

Strong intraday reversal
From multiple support levels (the gap area and AVWAP)
Potential reversal candle pattern (hammer)
RSI low and reaching oversold status
And with a DeMark 9 buy setup

Many factors came together to build the case for a bounce trade. Today it worked out.

These opportunities don’t happen often. So it’s critical to know what to look for and spot them as they do. Just as it is critical to know what to look for next.

From here the map leads to the next potential resistance levels.

The week-to-date anchored VWAP
The 5-day Moving Average
Previous pivot levels
The 8-day Moving Average
and so on

All of these are easily observable on the chart. But we never know which (if any) will prove to be important. That’s why they are potential support or resistance.

Furthermore, who knows if this bounce will prove to be a meaningful bottom? Or just a bit of quick relief before we go lower?

The sequence never ends. We must observe and adjust continuously as new data comes in. This map will help.

The Charts

SPY moved beyond yesterday’s high confirming the hammer pattern. As mentioned above, now we look at pivot levels and moving averages for potential resistance. How prices handle these areas will gauge whether or not the bounce is likely to persist.

QQQ also had the hammer pattern and a DeMark 9 buy setup, moving it up to the 8-day MA where some selling occurred.

IWM was able to take part in the bounce and moved beyond the 8-day MA before closing right on that level.

Thank you for reading Trading Adventures. This post is public so feel free to share it.

Share

DIA wasn’t quite as enthusiastic and will have more work to do.

TLT finally made some upward progress a couple of days after a DeMark 9 setup emerged, illustrating that the setups don’t always work so cleanly.

DXY moved lower taking some pressure off of stocks.

Leave a comment

The Closing Bell

The question remains, as always, ‘Where do we go from here?’ We’ll never know until it happens but with this map at least we know what to look for, where to turn, and how to adapt along the way.

See you Saturday morning with the ~~weekly~~ Monthly charts.

The Disclosures

***This is NOT financial advice. NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.

Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”) a SEC registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.

Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.

It is possible that Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual or it may reflect some other consideration. Readers of this article should take this into account when evaluating the information provided or the opinions being expressed.

All investments are subject to the risk of loss, which you should consider in making any investment decisions. Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors prior to making any investment decision.

POSITION DISCLOSURE

September 28, 2023, 4:00 PM

Long: SPY, QQQ, AMZN, MSFT, BA1013C195

Short:

Options symbols are denoted as follows:

Ticker, Date, Call/Put, Strike Price

Example: VXX1218C30 = VXX 12/18 Call with a $30 strike

A Look At The Map