Let us do a quick recap before a deeper dive into tomorrow’s plan . Those in a hurry should scroll down to the last section for a quick summary.
A) What worked and what did not:
Going into the session today, our bias was of a balanced day with a possibility of 4582 being sold. We could not even trade up to 4582 and printed a high for the day at 4577: Daily 10/27/21
Then during the session, 4565 interim level was published in my Telegram which pretty much held the session for most part of the day. Two ten point zippers launched from this level, before getting smashed in the last half hour.
Expectation was if we got to 4550 , it will hold. If it did not hold, we expected next support to come in at 4537-4541. This is exactly how it went, we did offer 4550 which was promptly bought handing another 10 points off the level with almost no MAE. The level broke on 3rd tap and went straight down to my 4543 where it found some buyers again.
So, overall, did not manage to get to 4582, however, we did get 4565 AND we did get favorable action at 4550.
B) the Action today (Market generated information):
Now before we launch into what may happen tomorrow, let us review key facts that were provided by none other than Mr Market himself. Let us objectively look at these facts and then try to form a couple of hypothesis’ out of it which may or may not work tomorrow, however, it affords us an un-opinionated way of looking at market action.
For almost 6 hours today, market balanced between 4560-4577. Market could not get an inch above 4577, which was right below yesterday’s VWAP (Volume weighted average price) . This is undisputed market generated information.
4565 was defended thru the day and the decisive break on high volume came within the last few minutes of trading session. The day traded almost 1 million lots out of which ~ 300,000 lots (30%) came within last half an hour. This is 2nd key Market generated information.
There were lot of good reasons and news to go up, BUT market ignored all those and closed at the lows. This is the 3rd distinct market generated information which is objective and unbiased.
Having set these aside from opinion, we can now review the session today and form few price scenarios below.
C) Tomorrow: Now this is the most subjective part of the equation. However using A and B above, we could string together a couple of hypothesis which may turn out to be high probability set ups tomorrow (hopefully!)
Unless drastic order flow occurs over-night, key levels are 4537, 4550 and 4565.
In Section B, all of the observations in my opinion point to bearish action except the 3rd one which is bullish imo (30% of volume coming in last half hour).
With this context, I have the following scenarios:
1) An open or a bid-up above 4550 may target a test of 4565 and then the highs from today at 4577, followed by 4590.
2) An open or offer below 4550 but above 4537 could tend to retest 4537, find buyers and bounce back up to 4550.
3) If 4537 slips, we may potentially be looking at a test of 4526 which in my opinion may prove to be a good support and stop/reverse the selling.
S&P500 bid 4551 at the time of this publication.
Lot of action today below my 4565, few market generated data points to a bearish tomorrow. However bullish trend is not dead yet and we are closer rather than farther from good support levels at 4526 and 4537.
We wanted selling to come in at 4582 however sellers came early at 4577. Good order flow levels are 4537, 4550 and 4565 for the Chicago session of 10/28/21.
So that’s about it for now. Updates, if any, will be provided in Telegram/Twitter. If you enjoyed my blog, make sure you share and subscribe, allow me to reach more traders, like your self!
~ Tic Tic 🍀