Daily Plan 7/20 '22

Traders- 

Last night I had expected the market to remain range bound between 3810 and 3880. When I started the day today, I noticed we had already tested the upper range and were going to open above 3851. 

This has been a key level of late and I tweeted below that  I think the market may remain supported above 3851. 

Furthermore, I sent out this tweet once 3880 broke during the cash session and we were trading at 3890. 

Tweeted warning at the open

At time of this post now we are up from 3890 a full 40 handles trading now near 3930. 

My newsletter again cautioned against going against the grain - it does appear a lot of folks were bearish at the close yesterday and were expecting a crash again. However based on the low volume profile yesterday and the note I sent, followed by the tweeted warnings, I was able to stay on the right side of this move. Again my note last night that I was not bearish at the close yesterday followed by the note this morning about the open being robust was my clue that I would not be bearish on this tape neither last night nor this AM.

More often than not, I will send out an update in the morning after reviewing the nightly auction on my Twitter and Telegram. For instance, if I am expecting 3880 in the morning to be resistance, but if we open and bid above 3890 within the first hour and I think the auction looks robust, I can tell you, I am not expecting lower prices at that point. 

So if you have not already, subscribe and check my updates. Also, I will never DM you on either of these platforms, so anyone reaching out pretending to be me is not me. 

On a side note, about pricing this product, I have made up my mind to raise it as I am offering far superior value for a fraction of cost - whether that is accuracy of levels or breadth of the calls from commodities like oil to bonds to stocks and FX. But the decision is not strictly about pricing. As this product has grown over the months, I do want to keep out certain non serious traders to ensure I can focus on the more serious ones. As a result, the price will go up shortly but it will not impact any one who is already a subscriber. 

HAL Warns 

I was not the only one warning about these things today. Halibutron sent out a warning that they see further increase in fracking capabilities very unlikely. As soon as this warning was issued by HAL, we saw a strong rally in crude oil from 100 dollars to about 104 at the time of this post. This corroborates what I have been saying about oil, that lower oil prices without first seeing the recent highs is extremely unlikely. 

Yet again this newsletter as a form of journaling for me and preparation has kept me on the right side - by not only making me go bearish at the close yesterday but also not being bearish at the open, infact turning bullish at the open. 

Emini was not the only one going up today 

I also shared the blurb about Netflix that even on shorter time frames I will not be bearish on NFLX and certainly not be bearish on this on longer term time frames if it drops to 160-170. My ER target was 210 and at time of this post we are now trading around 200, with the low being around that 190. 

With oil this high, why is S&P500 not crashing 

Yes, this is a little counter intuitive and  I think the answer is in a few things 

1. Going into this earnings season, the institutions have been on the sidelines awaiting lower prices . A lot of them are also short. So some of this is FOMO and the other but is short covering ahead of the earnings and key events like the FOMC. 

2. You also have the notion that inflation has peaked. Well, when you look at the oil or the bonds or the Dollar, I do not think they agree. 

3. These earnings may also be very good (compared to the estimates), However I will differentiate between good earnings of something like NFLX and TSLA which in my opinion really are niche services and products and instead focus on the earnings of AAPL and MSFT which are broader and more universal in their scope. 

4. In my private opinion, I think these earnings will be peak earnings for several quarters to come and I think any rallies into them may be short lived. 

Looking beyond day to day action 

Several commodities have sold off now and seem to be basing. Oil has now crept back in old resistance here around 104/105. Remember this market has been bouncy the last few weeks and one key reason has been a sustained trend down in crude oil and hence the price of gasoline. If we start seeing oil remain bid here above 104/105, I think it puts an upward pressure on gas prices and that means it could put a pressure on equities as well, reversing the key trend of last 5-6 weeks of lower prices in gasoline.

My levels for tomorrow

With the auction today and the TSLA earnings tomorrow AMC, the market may remain bid and range here between recent orderflow levels.

I am expecting the real move to come on Thursday after the TSLA earnings are out of the way.

Chart A SPY

Chart A. Break off a key trend line on light volume. At some point I will expect this trend line break to falter and fall back within the balance. It may be Thursday IMO. This break has violated the weekly plan resistance level at 3880 and could be aiming for order flow level 3950.

For tomorrow my key level will be 3910. And I think this may market may remain range bound between 3910 and 3970 awaiting the TSLA earnings.

I do expect TSLA earnings to cause large volatility in it’s related markets. My personal bias in TSLA is that we may sell off after the earnings as long as we hold 780 level. I will personally not be bullish on TSLA unless it were to trade around recent lows at 650. Or lower. I think if we pop after the earnings, it may be hard to sustain.

Scenario 1: Any dips towards 3911 may be bought for a test of 3950 weekly order flow level. Beyond 3950, the resistance lies at 3970.

Scenario 2: I think as we approach 3970, this may represent a good resistance for a move back down into 3880 weekly level.

We traded about 3940 at time of this post. Any updates to this plan will be shared in my Twitter in the AM. Stay tuned.

To summarize: we are now trading close to strong resistance levels but the impeding NFLX earnings as well as TSLA earnings may keep the market range bound. I expect real move to begin once the TSLA earnings are out of the way tomorrow AMC.

~ Tic Toc

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