Submitted by DaddyDersch t3_zzdlbg in wallstreetbets
What an ABSOULTE WILD year this has been… if you are still here right now and you still have money left in your account… congrats because let me tell you this has been one of the hardest years to trade that many of us in our life times will ever trade.
The goal of 2022 was and remained capital preservation if you accomplished that goal… then congrats. The goal of 2023 in my opinion is the same… capital preservation… There is going to someday be another bull market and even if its not a bullmarket… there will someday be another market that is more rational and more obeying of the technicals. Live to trade another day…
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here is the new JPM collar btw!
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I mentioned this pattern yesterday in my TA on SPY. With 378 clearly being “bottom” for the foreseeable future I envision this to be our next pattern to play out. This would give us a rally in January. I would start to eye a retest of 405 to 415 area through the month of January.
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I started to analyze the 2022 bear channel weekly movement. When we take a look at it you can see we have this cycle of peak at channel resistance -> short drop -> short peak -> full dump -> retest of channel resistance. We have been in this pattern all year long. We did however, break through that channel resistance of the 2022 bear channel the day of CPI. However we fell through it and we have not touched it since.
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Taking a look at the cycle you can we just had a 21 day 8.7% drop for our first short drop… this SHOULD be followed up with about 50-75% of the length and 56% of the distance recovery… so that means we should be looking at about a 10-14 day 4.8% recovery minimum.
That would put SPY at the week of 1/16 to 1/20 near 393 minimum. 393 on the weekly timeframe is actually the red bear channels resistance line. That is my target for next week.
Taking a look at the structure of the last two weekly candles you can see they are back to back gravestone dojis that came down and bounced off that 376 area and their candle bodies held support at 383 level too.
We have been waiting for the 390 resistance retest and I believe that is our target for next week.
Key support- 375.6 -> 363.7
key resistance- 390.1 -> 398.8
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Taking a look at the futures daily chart you can see we are in a massive breakout pattern right here. We did double top off that 3870 key level, however, as you can see we closed out with a massive wick to the downside. With this close this should be seen as a bullish candle for Monday. I would be shocked to not see us breakout over 3870 Tuesday and I will be eyeing a touch of 3910 to 3920. That would be a 1.1 to 1.3% green day on Tuesday.
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Besides the June quarterly the last 3 out of 4 quarterlies have opened green. The biggest open was 1.1% at the September quarterly and the lowest is 0.28% for an average of 0.58% green open on the day after quarterly.
Something else I had noted for Tuesday DTE options is that the IV closed in the 11s. This is VERY low for SPY IV. Generally almost every morning opens with an IV of 25-30% and slowly ends around 20%. With an IV pump and high probability green open I found a call swing worth the risk for Tuesday. That was also a very bullish finish to the day, week and year. The bears no matter how many times they tried to break us down the last two weeks were not able to.
My only hope for 2023 is that we finally get some real direction and that the technicals come back into play better.
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I mentioned the inverse head and shoulders on SPY daily and honestly its kinda ugly but I do see it forming here on futures weekly. I could see us reading 4200 by middle of February.
As bearish as I want to be and as bearish as I believe the markets tried to be today it just couldn’t do it. The bears do not have the momentum right now to break us down further.
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A couple important things to note ahead in the month of January.
First up on Wednesday (2 days into the new trading year!) we have FOMC minutes (I will have a detailed trade plan posted sometime this weekend for that!)… followed the next day by ADP followed by unemployment rate (The last three have resulted in 1%+/- openings)… And then finally the week after that we have CPI on Thursday January 12th.
A big first two weeks of the year. The question is…. Will FOMC minutes remind the market of how bearish JPOW was or much like in November where we had a massive red FOMC the markets didn’t care and we ripped on FOMC minutes hitting the wire.
I remain going forward bullish until markets prove me otherwise… things that COULD prove me otherwise… 1. Closing AND holding below 378. 2. VIX popping and holding over 25+ or 3. A huge miss on CPI. I don’t at this moment forsee any of those coming true…
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And then there was… Tesla….
After absolutely being slammed the whole month of December I have to give it to the tesla bulls and say they finished on a very positive note!
Taking a look at our cycles we can officially say we have closed out our downward cycle on Tuesday. That remains the longest and biggest drop tesla has seen during this sell off period.
Looking at the trend we should be expecting about a 4 day 14% rally. However, we have to remember that Tesla put in double its usual sell off… perhaps we get double the recovery?
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Taking a look at the tesla daily I have to say this candle body structure is both impressive and confusing. Yesterday Tesla put in a 8.08% green bullish day… however, today only putting in 1.12% green actually was a bullish engulfing candle of a green candle. That is not something you see too often at all.
Things to note here is that we are sitting at key 123.2 resistance and we did not quite touch the daily 8ema. SPY is going to need to breakout over the daily 8ema in order for me to be bullish more than Tuesday. However, if this is a double recovery on Tesla we could be looking for sometime before 1/9 for Tesla to retest the 136 to 140 area.
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I mentioned last week in my weekly TA that tesla is in a cycle of 3 red weeks followed by a recovery/ consolidation week before the next leg down. Taking a look at the weekly here Tesla could have an impressive pop all the way to 147 and still be in that broadened red bear channel.
There also should be noted a critical bounce occurred off that 11.4 support that dates back to 2020. With that level holding and Tesla receiving a decent bounce and forming this possible morning star doji I am bullish for tesla going into the first week of the year.
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The VIX has been detached from reality but at times the structure remains impressively accurate. We failed now for 6 days in a row for the VIX to close a candle over 22.2. With these 6 rejections here (in addition to the 8 out of 9 last daily candles that have held 3845 support on futures) I remain once again bullish for next week.
This evening doji star pattern formed here on the VIX should take the VIX down to about 21.2 Tuesday. We as you can see inside of this blue bear channel are maintaining a breakout/down triangle also. Unless the VIX opens over 22 (+1.5%) at open and all day that will be a break through of support and that should start the next leg down on the VIX and subsequently the next leg up on the markets. This movement should take us into CPI week.
Year in review
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Before someone says why am I not posting a broker screenshot… well I have moved money throughout the year and also changed brokers and accounts during the year and I frequently take money out of my options account. I also couldn’t find data from January as I was still working full time back then and didn’t keep records like I do now.
But taking a look at this the biggest thing that strikes me here is a few things. 1. The fact that my worst weeks win rate was during a green week is crazy to me. But this was back in February when we had those massive $10-$14 days and we could pick up 100-150% wins like it was easy. Aint doing that shit no more that’s for sure.
The other thing that is intriguing to me is that my average win rate on a losing and winning week is only a 6% difference. Tells you the overall power of stop losses. Also intriguing and I think really makes a statement is the fact that I had a really 2.5 month long stretch of straight struggling was still able to close out a really green year. This is where small wins over time average out to be huge wins. There is no reason to look for massive win after massive win. And if you have a really bad stretch that is okay its not the end of the world.
Something else that really helped me this year too is that when I noticed I was struggling in June I sized down heavily on my position size and I still have not sized back up yet fully to that full position size I was using up until June.
Overall a pretty great year despite the bullshit that 2022 presented us. I look forward to 2023 and I hope whether bull, bear or flat that we can at least get a market that is rational and obeys the technicals.
Daily log-
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Pretty light trading today. Had that really nice swing win over night which covered some earlier losses in the week. After that the tight morning range and the absolutely mind numbingly boring price action I didn’t trade a whole lot. Took a lotto put around that big after noon dump time and took a nice win. Closed around 22% and it went on to be well over 100%...
Overall honestly despite closing a green week (mostly thanks to that swing put over night… I really didn’t feel like I had my best week of trading. I would have liked to have a better week than I did but I felt like iw as struggling with the technicals this week. Felt like by time my setup finally signal a buy for something the move either never happened or it just straight reversed on us. Even today during PH which granted this was expected to be a highly volatile PH… the 315pm candle was red and a massive gravestone doji rejecting off a key resistance level. With that double top the 1min, 5min and 15min all being overbought and volume switching over to sell… we should have seen a bigger drop but what did we see? We saw a huge pop of another 0.6% in the last 30 minutes.
Weeks like this as someone who trades with a clear cut and dry strategy it makes it extremely hard to take positions. I find myself looking at price action alone and seeing trades develop but being unable to take those trades because of how the indicators are presenting themselves.
Tough week for sure. Hoping now that we got the collar rolled, tax loss harvesting is over and everything that we can finally see some normalcy in the markets again next week.
I wish each and every one of you a happy new years! I will see you guys on Tuesday!
BugTotal6212 t1_j2bkq20 wrote
Impressive gainz. Your bullish sentiment doesn't make my puts feel good. Have 380p 2/17 and apple 120p 6/30. If I sell we dump and I hold we rip. Fml