Daily Plan 12/3/21

Traders- 

AT 4511 yesterday, my play was to sell the rallies into 4550-4560. While this worked for first half of the session, as of this post, the buyers have overwhelmed the sellers. We are trading at 4585 at the moment. See this plan from yesterday and context behind it, if you have not already: 12/2/21 DAILY

100 % market internals driven day today. See chart below. S&P500 opened below 4520 and at that time TRIN was 1.2! We got two chances to sell 4520 for about 10 points each before TRIN collapsed below 1 and the market really took off. These are very strong readings and therefore supporting the market right now.

TRIN did not hold above 1 today. Bullish. Buy the dips.

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Longer term however, the trend is still down. I have seen a lot of these counter trends ,dead cat bounces. What will convince me a bottom is in is a couple of closes in daily time frame above 4580. In fact I will think a close below 4556 today/tomorrow may be very bearish for rest of the month IMHO.

At the time of this post, we just traded 4585. At-Least the good part is I was not outright bearish at the lows yesterday 4511 per the trade plan and wanted to sell the rallies into 4560. This paid off a bit but not for OTM puts in a sustained manner, only about 40 points for futures shorts. I was in and out quite a bit and at one point I was red. But managed to dig my way out and now waiting for some action below 4556-4560.

The bad part is it may not be a short covering, if TRIN stays like this below 1 tomorrow too. This is why I always say confirm with the internals what the market is doing at a microstructure level. BTW look at NVDA. How solid and green!

As I draft this, the close is going to be telling. TRIN is really dead at 0.6. By training, I cannot bear to bring myself to short here. However 4556 is an important tell. If we close below this, I think we will test 4510 and below tomorrow. 

Then there is also the question of sentiment. I polled this an hour ago at 4560, and the response was overwhelmingly bullish. No wonder, we are now up about 30 handles from this poll!

Figure: Bullish Contrarian Intraday sentiment at oversold levels

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Here's my two scenarios for tomorrow: 

1. If we OPEN below 4556 tomorrow, I will be leaning bearish , confirm with the internals and my targets will be 4496. My LIS in sand in this scenario will be 4562. 

2. If we open above 4556 tomorrow with good internal readings below 1, I want to be bullish , buy the dips into 4456-4562 with LIS at 4550, and my targets will be 4612-4620 where I think more motivated sellers may reenter the market. 

Short and sweet update for now. I am working on an additional post on some strong stock names which I think will rebound faster than others IF (And ONLY IF) S&P500 finds a bottom here. More on this later. Maybe tonight, only for subscribers. Keep an eye out on it. 

~ Tic Toc

For those who are just joining me, below are some resources to get started in order-flow:

1. My Prep/Psychology etc

1. Basic Terminology

2. Volume Profile Part 1

3. Key Market Generated Indicators

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