Hey everyone,
Thank you to all who attended the live stream, its really great to answer your questions and converse live with everyone!
If this is something that you enjoy or would like to see more of, let me know!
Anyway, let's talk about December.
I am not going to go over everything I went in the live stream because I got thinking and really things are pretty straightforward at this point. Let me explain.
Where SPY is now:
SPY is at a really pivotal trendline resistance. Now, trendlines are notoriously unreliable. However, this is a very sizeable trendline. You know we have respected it all this year and each time we have made contact with it, it has lead to the attainment of a new low:
Expectedly and obviously, the bears defended this trendline today. There is no way this type of sizeable trendline is going to just be shot through in 1 trading session, especially after the dramatic move we had.
So what is next?
Really, the answer is really simple. If we break this trendline and hold. Its up. The market has affirmed that it wants to continue up at this time. Will it be indefinite? No. But it will make things more interesting. Why? Because then it becomes a ticking time bomb. The bottom is really likely not in here and we are likely to see new lows either this month or next year. But if we break this trendline, it becomes a lot of tempestuous feelings from investors, institutions and retail and there will be a reluctance to really buy into any notion that a true bottom is in. So, we can expect short term bullish momentum followed by a swift and abrupt tumble probably into next year.
If SPY respects this trendline, everything becomes irrelevant. Its simply a short plain and simple. Easy peasy, lemon squeezy right? It would be the most under-whelming outcome but the most straight forward to swing trade.
So which is likely?
Well, we should have some idea tomorrow what the market is thinking and what the market wants to do. Obviously we have some clues here that could tilt the scale one way or the other, but really speculation is so unnecessary when we are literally hours away of seeing what the market wants to do with this overhead resistance.
But what are the clues?!
Well, what I am seeing is this:
1. For one the market has strategically managed to suck itself to this trendline. Its not drifting too far from it, but its also leaving some distance to perhaps get a "running start" so to speak on a re-attempt.
2. Probabilities for the month favour slightly bullish momentum. Not overwhelmingly convincing, but there is a notable preference here for both a higher high this month which.. actually never mind that probability already came true. So I guess that's irrelevant now. But there is also a high probability for hitting the monthly real time bull target at 414. (All the bull and bear targets are listed in the chart above)
3. Right now ES1! futures is setting up how I would generally anticipate them setting up if they wanted to be bullish. That is not to say that this isn't going to tank, but what I am seeing is making me lean a little slightly to the bullish side. But this could simply be a pulse up and then massive rejection. Its really hard to judge. But one thing is for sure, ES1! 99% will see at least 4084 before the day ends. Whether it hits it on a whipsaw effect on the news release at 8:30, or reaches it between now at 8 am, its hard to say, but it should see this level in the very near future.
4. Santa clause is coming to town! Or is he? I see a lot of debate about a Santa Rally. I am hearing a lot of "Sorry kids, no gifts this year". But like, maybe its because I am a statistician but like its so ridiculous to bet against a Santa Rally. Between 1994 and 2021, stocks have risen 23 times. That is a likelihood of 85% in a 27 year period. Over the last 97 years, the stock market gained 77% of the time. Extrapolating, that means we can expect the next 27 years to have a santa clause rally at least 75% of the time. Those odds are better than most trader's odds when they take a position. So betting against isn't the cleverest move, especially when, by generally accepted stats, each time you take a trade there is a 50% chance you are correct. I am not saying that there will be a santa rally, I don't know. I just think that we can't be too quick to brush it off as an impossibility because the odds of it not happening are not in our favour here. So we have to prepare for whatever the market wants to throw at us.
5. You can see in the chart above there are a lot of buyers coming in on the 4 hour chart. This is prevalent on all major time frames and is showing that there is quite a bit of optimism still lurking.
6. Looking at other charts like DIA and IWM kind of lend credence to the idea that there could be a bit more upside here, but again its really on the fence.
7. I am getting really quite similar things on Python probability models for tomorrow as I got for Thursday. So that's telling me we may be seeing something big coming. Whether it be up or down, who knows!
So what does it all mean? What do I think will hapen?
I am on the fence here. I don't know but there is no reason to need to speculate because we should have clarity tomorrow, if not then next week. If this resistance can be broken and held, then its a clear play to the monthly high targets.
If its rejected and held then its a clear play to the monthly low targets and probably beyond.
Expect curve balls to be thrown for this month at least, because of the probability of a santa clause rally, but either way these are all short term moves despite the longer term picture.
There is incredible short interest too. I am seeing these put to call ratios just climbing each minute. But its a very poor indicator of likely trajectory. In fact, it was me looking at these ratios that made be reluctant to swing long into Thursday, which obviously was stupid. But like, I am not so egotistical to think I am smarter than the millions and billions of people who were buying all these put options, so I figured its best to wait, despite being proven correct afterwards *sigh*. Oh well. At least I was right, right? And I did make money from it. So there.
Anyway, personally I am very VERY small size, positioned long. Incredibly miniscule position. The thinking is, if this runs for it and takes off, then I am going to want a head start because upside is capped no matter how you look at it. If this rejects resistance and begins its descent, it will be prolonged and will likely be bringing us to some pretty dramatic lows. There will be time to catch that move. However, I think the bigger more aggressive move that would be harder to catch would be a move up, just because of the fear sentiment that would likely catchup to all these buyers and lead to a massive panic sell. So this is why I personally have started positioning myself long, with the full expectation that its probably going to be at a loss. Its more of gamble for the news tomorrow morning so we'll see how it goes.
Either way, this is actually really exciting! Its like, pull out the popcorn and watch exciting! More people are short positioned so its going to be very painful to watch if this does break that trend resistance. The best outcome here, honestly and truthfully, is for it to respect the trend resistance. Because then its really easy. And that's why I think its probably the wrong answer. But hopefully tomorrow will tell! Otherwise, we see range bound and more indecision which would be pretty annoying.
Thanks for reading, trade safe everyone!
Thank you to all who attended the live stream, its really great to answer your questions and converse live with everyone!
If this is something that you enjoy or would like to see more of, let me know!
Anyway, let's talk about December.
I am not going to go over everything I went in the live stream because I got thinking and really things are pretty straightforward at this point. Let me explain.
Where SPY is now:
SPY is at a really pivotal trendline resistance. Now, trendlines are notoriously unreliable. However, this is a very sizeable trendline. You know we have respected it all this year and each time we have made contact with it, it has lead to the attainment of a new low:
Expectedly and obviously, the bears defended this trendline today. There is no way this type of sizeable trendline is going to just be shot through in 1 trading session, especially after the dramatic move we had.
So what is next?
Really, the answer is really simple. If we break this trendline and hold. Its up. The market has affirmed that it wants to continue up at this time. Will it be indefinite? No. But it will make things more interesting. Why? Because then it becomes a ticking time bomb. The bottom is really likely not in here and we are likely to see new lows either this month or next year. But if we break this trendline, it becomes a lot of tempestuous feelings from investors, institutions and retail and there will be a reluctance to really buy into any notion that a true bottom is in. So, we can expect short term bullish momentum followed by a swift and abrupt tumble probably into next year.
If SPY respects this trendline, everything becomes irrelevant. Its simply a short plain and simple. Easy peasy, lemon squeezy right? It would be the most under-whelming outcome but the most straight forward to swing trade.
So which is likely?
Well, we should have some idea tomorrow what the market is thinking and what the market wants to do. Obviously we have some clues here that could tilt the scale one way or the other, but really speculation is so unnecessary when we are literally hours away of seeing what the market wants to do with this overhead resistance.
But what are the clues?!
Well, what I am seeing is this:
1. For one the market has strategically managed to suck itself to this trendline. Its not drifting too far from it, but its also leaving some distance to perhaps get a "running start" so to speak on a re-attempt.
2. Probabilities for the month favour slightly bullish momentum. Not overwhelmingly convincing, but there is a notable preference here for both a higher high this month which.. actually never mind that probability already came true. So I guess that's irrelevant now. But there is also a high probability for hitting the monthly real time bull target at 414. (All the bull and bear targets are listed in the chart above)
3. Right now ES1! futures is setting up how I would generally anticipate them setting up if they wanted to be bullish. That is not to say that this isn't going to tank, but what I am seeing is making me lean a little slightly to the bullish side. But this could simply be a pulse up and then massive rejection. Its really hard to judge. But one thing is for sure, ES1! 99% will see at least 4084 before the day ends. Whether it hits it on a whipsaw effect on the news release at 8:30, or reaches it between now at 8 am, its hard to say, but it should see this level in the very near future.
4. Santa clause is coming to town! Or is he? I see a lot of debate about a Santa Rally. I am hearing a lot of "Sorry kids, no gifts this year". But like, maybe its because I am a statistician but like its so ridiculous to bet against a Santa Rally. Between 1994 and 2021, stocks have risen 23 times. That is a likelihood of 85% in a 27 year period. Over the last 97 years, the stock market gained 77% of the time. Extrapolating, that means we can expect the next 27 years to have a santa clause rally at least 75% of the time. Those odds are better than most trader's odds when they take a position. So betting against isn't the cleverest move, especially when, by generally accepted stats, each time you take a trade there is a 50% chance you are correct. I am not saying that there will be a santa rally, I don't know. I just think that we can't be too quick to brush it off as an impossibility because the odds of it not happening are not in our favour here. So we have to prepare for whatever the market wants to throw at us.
5. You can see in the chart above there are a lot of buyers coming in on the 4 hour chart. This is prevalent on all major time frames and is showing that there is quite a bit of optimism still lurking.
6. Looking at other charts like DIA and IWM kind of lend credence to the idea that there could be a bit more upside here, but again its really on the fence.
7. I am getting really quite similar things on Python probability models for tomorrow as I got for Thursday. So that's telling me we may be seeing something big coming. Whether it be up or down, who knows!
So what does it all mean? What do I think will hapen?
I am on the fence here. I don't know but there is no reason to need to speculate because we should have clarity tomorrow, if not then next week. If this resistance can be broken and held, then its a clear play to the monthly high targets.
If its rejected and held then its a clear play to the monthly low targets and probably beyond.
Expect curve balls to be thrown for this month at least, because of the probability of a santa clause rally, but either way these are all short term moves despite the longer term picture.
There is incredible short interest too. I am seeing these put to call ratios just climbing each minute. But its a very poor indicator of likely trajectory. In fact, it was me looking at these ratios that made be reluctant to swing long into Thursday, which obviously was stupid. But like, I am not so egotistical to think I am smarter than the millions and billions of people who were buying all these put options, so I figured its best to wait, despite being proven correct afterwards *sigh*. Oh well. At least I was right, right? And I did make money from it. So there.
Anyway, personally I am very VERY small size, positioned long. Incredibly miniscule position. The thinking is, if this runs for it and takes off, then I am going to want a head start because upside is capped no matter how you look at it. If this rejects resistance and begins its descent, it will be prolonged and will likely be bringing us to some pretty dramatic lows. There will be time to catch that move. However, I think the bigger more aggressive move that would be harder to catch would be a move up, just because of the fear sentiment that would likely catchup to all these buyers and lead to a massive panic sell. So this is why I personally have started positioning myself long, with the full expectation that its probably going to be at a loss. Its more of gamble for the news tomorrow morning so we'll see how it goes.
Either way, this is actually really exciting! Its like, pull out the popcorn and watch exciting! More people are short positioned so its going to be very painful to watch if this does break that trend resistance. The best outcome here, honestly and truthfully, is for it to respect the trend resistance. Because then its really easy. And that's why I think its probably the wrong answer. But hopefully tomorrow will tell! Otherwise, we see range bound and more indecision which would be pretty annoying.
Thanks for reading, trade safe everyone!
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Someone liked me! I got LUCKY, I got out of my longs for a profit today (thankfully was long on IWM and not SPY which was 10000% more bullish).
Very interesting probs for next week. Lots of excitement to talk about. But I will leave it for another day.
Ending the week very green and quite content. Hope you all had an amazing week!
Enjoy your weekend everyone!