Weekly Plan 8/1 '22
One of my favorite quotes related to markets is by Ray Dalio when he says “Pain+Reflection = Progress”.
I guess this is apt not just for the markets but any thing in life really. Mistakes are part and parcel of trading and what’s even more important is do we learn from our mistakes - the FED embarked upon a historic quantitative tightening program at start of this year to curb 40 year inflation and a balance sheet full worth 9.1 trillion dollars. Here we are after 7-8 months , inflation has not budged but neither has the FED balance sheet which still stands at 9 trillion dollars . Are mistakes being made here, is the fed leaning from these mistakes ?
Only time will tell.
This past week was a mixed week for me personally. Many moves that I expected did not happen. Many moves which I did not expect happened. On balance, my daily levels did very well. My weekly levels did not quite worked out the way I expected. On earnings plays, I only shared 3 this week: META bear , NSC Bull and AAPL bear. Out of those, META and NSC tuned out to be good. AAPL was wrong call.
There are no postmortems in trading but I want to address some noise around how my levels did not work this week. My primary expectation was that the stocks may sell down into 3851 this week BEFORE the GDP print on Friday and then rally into 4060 which may cap the market. While this was my weekly time frame thesis, I did not expect any sort of crash or major sell this week. See below from my tweets on Tuesday. Further more, I updates these weekly levels with daily levels. The daily levels turned out to be far more effective at forecasting the day to day market once we dumped on Monday from that 3990 into low 3900s.
I was my self concerned about every one being extremely bearish into this event heavy week. I think what happened is folks were too bearish due to the nature of the events of this week. These consensus bearish bets were just not going to be paid due to being a crowded trade.
A day by day summary of levels
In interest of accountability and transparency, below is a day by day summary of my levels and all ideas.
Starting with Monday.
For Monday, I shared 3990 as session Line in Sand on upside and 3920 as the key levels in my weekly plan.
Monday’s session high was exactly 3990 and we sold down into 3950.
On Tuesday, I shared 3960 as the key level and expected to sell down into 3920 if we opened or offered below 3960. Further I shared 3960 as the pivotal level for bullish continuation.
The session high on Tuesday was exactly 3960 on Tuesday and we sold down into almost 3920 which was the session low on Tuesday.
On Tuesday, I was also bearish on META earnings which sold from 170 to under 155 the next day.
I was also bullish on ENPH and CMG both of which turned out to be monster moves to the upside. See below.
My key level for Wednesday was 3960 shared when we were trading 3940. I expected the bulls to regain control of this market if they took out 3960. We opened around 3960 and stayed above it for most of the session with Tic TOP supporting the moves.
My line in sand was 4030 on top and 3990 on the bottom. We opened at 4030 and sharply sold off to 3990. This happened to be the low of the day and market got bid up. See below.
I was AAPL earning bear and expected to trade below 150 AT 159. This turned out to be wrong as AAPL rallied into 165 after the earnings. For S&P500, I did not share an official plan but I mentioned if AAPL append up I do not want to be bear on S&P500 and the dips may get bought. This indeed turned out to be the case as Friday wthe dips into 4080 were bought for a test of 4150.
There was some confusion as to I was bearish on GOOG and MSFT, this is not true.
I actually had no view of the GOOG and MSFT earnings in this newsletter but thought the stocks were balanced on weakness by the strength in AAPL and TSLA. My earnings foreacats this week I think was only for META BEARISH, NSC bullish and AAPL bearish. NSC was another great winner in addition to ENPH and CMG, rising from 140 to 150+. OXY made new highs.
The purpose of this summary is not to boast but simply to be transparent about my work and demonstrate how the market has been reacting around these levels.
Look active trading (0DTE) is just NOT going to move in a straight line. Too many variables in short time frames. It’s akin to competitive sports or even a war and only way forward is you bring 2 dollar for every dollar lost — if you have this mindset then there is a path forward. There are NO 100% guarantees but there are plenty of 50% opportunities to make a couple bucks risking one every time.
I don’t believe you have to be on or off at all times - like I could be a bear and be bullish at same time shorter time frames. In fact many days, I am BOTH bullish and bearish in SPY yet at the same time expect more downside to come for me to buy for 3-5 year time frames at lower prices and hold it.
On shorter time frames I still think tic top is the gold standard to keep on right side of momentum, read below ALL about it.
More educational content below. I plan on releasing exclusive price action nd tape reading content for traders soon. Stay tuned and subscribe now to get these tapes when they are published.
This is also not a bad time to subscribe to my newsletter for pennies a day before the price goes up significantly. If you like the preview so far, use the button below to enter your email and get the previews delivered in your inbox. I will also be covering my thoughts on what I expect this week in the S&P500 market and my view on some earnings like AMD.
Idea behind this recap is to demonstrate the OrderFlow levels on a day to day basis are working as intended by keeping me on right side of the tape even while my own personal bias has been very bearish.
Now what do I mean by my personal bearish bias?
It simply means if I am going to be ploughing some money into the markets for 2-3 + year time frame, I still continue to believe I can have lower prices that were available in May-June.
My bearish bias must NOT be confused with the day to day auctions, which is very succinctly covered in these daily and weekly plans .
These are short term auctions and many times in-fact more often than not they are encapsulated on both ends by my levels. The day to day summary from last weeks 5 auctions demonstrates the market on intraday time farmed work with these levels.
Some of other ideas shared by me did extremely well. Gold rallies about 75 dollars off my 1700 low call.
Then we saw an enormous rally in crude oil from a low of about 94 to 102 dollars. Chinese stocks continue to crash as I became a bear on BABA at 120, at time of this post it has sold down into sub 90.
I want to spend some time to briefly explain my view point why I am not in the camp that we have seen the final lows yet.
To help understand this, I think it makes sense to use some recent examples which will show what I mean by this.
Recommended reading: Weekly Plan