8/3: Daily Recap, Outlook, and Trading Plan
Recap
The last newsletter discussed the potential for bearish seasonality in August for SPX. This was timely as volatility was unleashed shortly after the newsletter was sent out. The catalyst for the volatility and selling was the US credit downgrade, which triggered a loss of critical multi-day support. This led to the most eventful evening session of 2023, followed by more daytime volatility.
Markets Overnight
🌏 Asia: Mostly down
🌍 Europe: Down
🌎 US Index Futures: Down a bit
🛢 Crude Oil: Up
💵 Dollar: Down slightly
🧐 Yields: Up strongly
🔮 Crypto: Down
World Headlines
The timing and reasoning of the Fitch Treasuries downgrade is being questioned, limiting the downside which was much worse when S&P Global downgraded 11 years ago.
Key Structures
The core pattern containing the entire consolidation since the July 19th high was a broadening formation, also called a megaphone. This pattern broke down yesterday and will need to reclaim support to trigger any sustained squeeze upward. The next major support down below 4553 is 4508-15. This is the support of the large, purple ascending triangle structure we broke out on July 12th.
Support Levels
Supports are: 4531-33 (major), 4527, 4516 (major), 4509 (major), 4497-93 (major), 4486, 4475, 4467, 4455 (major), 4441-46 (major), 4431, 4424 (major).
Resistance Levels
Resistances are: 4543, 4531-33, 4551-53 (major), 4560, 4565, 4575 (major), 4584 (major), 4592, 4599,4606-08 (major), 4613, 4620, 4624-26 (major), 4634, 4644, 4653, 4666-70 (major).
Trading Plan
For the bull case today, there is no short-term bull case until a resistance reclaims. For now, this is 4551-53 and reclaim there would trigger back to 4575, likely dip there, then probably back to 4605. The bear case today begins on the fail of 4531. One could short this 4527 or so with target of 4509-16.
Wrap Up
These are level to level traders markets and they are prime conditions. The focus will be on reacting to the action and not making predictions. If a prediction had to be made, it would be a backtest of 4553, perhaps a sell to 4509-16, then a rally from there.
Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decisions.
The last newsletter discussed the potential for bearish seasonality in August for SPX. This was timely as volatility was unleashed shortly after the newsletter was sent out. The catalyst for the volatility and selling was the US credit downgrade, which triggered a loss of critical multi-day support. This led to the most eventful evening session of 2023, followed by more daytime volatility.
Markets Overnight
🌏 Asia: Mostly down
🌍 Europe: Down
🌎 US Index Futures: Down a bit
🛢 Crude Oil: Up
💵 Dollar: Down slightly
🧐 Yields: Up strongly
🔮 Crypto: Down
World Headlines
The timing and reasoning of the Fitch Treasuries downgrade is being questioned, limiting the downside which was much worse when S&P Global downgraded 11 years ago.
Key Structures
The core pattern containing the entire consolidation since the July 19th high was a broadening formation, also called a megaphone. This pattern broke down yesterday and will need to reclaim support to trigger any sustained squeeze upward. The next major support down below 4553 is 4508-15. This is the support of the large, purple ascending triangle structure we broke out on July 12th.
Support Levels
Supports are: 4531-33 (major), 4527, 4516 (major), 4509 (major), 4497-93 (major), 4486, 4475, 4467, 4455 (major), 4441-46 (major), 4431, 4424 (major).
Resistance Levels
Resistances are: 4543, 4531-33, 4551-53 (major), 4560, 4565, 4575 (major), 4584 (major), 4592, 4599,4606-08 (major), 4613, 4620, 4624-26 (major), 4634, 4644, 4653, 4666-70 (major).
Trading Plan
For the bull case today, there is no short-term bull case until a resistance reclaims. For now, this is 4551-53 and reclaim there would trigger back to 4575, likely dip there, then probably back to 4605. The bear case today begins on the fail of 4531. One could short this 4527 or so with target of 4509-16.
Wrap Up
These are level to level traders markets and they are prime conditions. The focus will be on reacting to the action and not making predictions. If a prediction had to be made, it would be a backtest of 4553, perhaps a sell to 4509-16, then a rally from there.
Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decisions.
