Whiplash Anyone
Is there a way to make sense of this market?
You’ll think I’m crazy, but it all makes sense.
Lend me your ear. Early in the week, the market looked unstoppable to the upside for what seemed like no reason at all. But what was driving this?
Prospero signals were somewhat mixed and quite accurate. Yet we still ran up? What am I smoking you ask. Yes ADD 0.00%↑ (Advanced Decline) and the $TICK were strong therefore one would say that the market structure was strong.
Focus your attention on Wednesday, for seemingly no reason structure looks to have fallen to pieces.
The strength on Monday and Tuesday was predictable and those who pay great advantage to volatility (including those who took the $SNOW trade with me) knew there was an expected drop in volatility mon/tues. Remember, when volatility drops, stocks rise.
Add bullish options flows from Monday into Tuesday into the mix we had all the fuel we needed for a rally. Tuesday afternoon you can see how flows started slow and gave us a choppy Wednesday.
Then we get to today, META presented some disappointment in their earnings report and the AI comments related to when AI efforts would affect earnings positively gave investors some pause and the markets sold off. In typical fashion the selling was overdone and as of 2:15 pm today we are getting back to support (see the MARKs below).
Going forward my thoughts are, if $SPX closes above 5050 and we get some good earnings reports tonight, the 1st half of the day tomorrow should be positive.
What is my trading plan tomorrow? I will look to scalp SPX on pullbacks into support or resistance. If the day looks like chop, I will make it a long weekend. *Note, I don’t usually trade on Friday afternoons, as after the European close the only buyers that are left are here in the U.S. and most traders aren’t inclined to hold bought positions through the weekend these days.
Hope this helps you all understand this week’s ups and downs.
I have noticed and traded a pattern in an equity and have made some good profits off it over the last 2 days. I will post that trade below and if I make it again tomorrow, I will post it in the Prospero Discord.