ES/SPX Weekly Plan | 11/21 - 11/26
We had a relatively tight trading range for ES last week, which resulted in a concentrated volume profile with more of a POC range vs single level (see 2 highest volume profile bars).
Our plan is to go long at the BTD's with defined risk. if BTD 2 is broken with volume, we'll flip short very quickly as that's a low volume node immediately below. So long as we close above BTD 2, we'll remain bullish. If we close under BTD 2, we'll be using the BTD areas above as rejection areas.
It will be very important to monitor the dealer gamma exposure throughout the week to get a sense of how dealers will need to trade rallies in either direction. High gamma exposure will lend itself to mean reverting price action (like last week), while negative gamma will add fuel to rallies.
Reminders:
LVN = low volume node. the top/bottom of this usually serves as a support/resistance, but if broken, price can get slippery in this area
POC = point of control. this is the price that had the highest amount of volume in the range analyzed (which is the previous week). price needs to break out of this area with volume for a clue to market sentiment.
VAH = value area high. "value area" is where 70% of the volume was traded in the range analyzed. the value area high is the upper boundary of this area
VAL = value area low. the lower boundary of the value area
BTD = buy the dip/go long
Our plan is to go long at the BTD's with defined risk. if BTD 2 is broken with volume, we'll flip short very quickly as that's a low volume node immediately below. So long as we close above BTD 2, we'll remain bullish. If we close under BTD 2, we'll be using the BTD areas above as rejection areas.
It will be very important to monitor the dealer gamma exposure throughout the week to get a sense of how dealers will need to trade rallies in either direction. High gamma exposure will lend itself to mean reverting price action (like last week), while negative gamma will add fuel to rallies.
Reminders:
LVN = low volume node. the top/bottom of this usually serves as a support/resistance, but if broken, price can get slippery in this area
POC = point of control. this is the price that had the highest amount of volume in the range analyzed (which is the previous week). price needs to break out of this area with volume for a clue to market sentiment.
VAH = value area high. "value area" is where 70% of the volume was traded in the range analyzed. the value area high is the upper boundary of this area
VAL = value area low. the lower boundary of the value area
BTD = buy the dip/go long
註釋
MULTIPLE opportunities in the ES / SPX were presented this week based on our plan. All 5 bear targets were reached, with many chances to buy the dip for scalps to the long side.The market has now met new headwinds with the COVID variant making waves across the globe, as well as delisting news from China. From the options market perspective, this has caused many puts to be bought, and has kept dealers in negative gamma territory. There are a few things we are looking out for to determine subsequent market moves:
1. More info about the new strain. Currently, all that is know is that this strain contains many more protein spikes, which increases the possibility for it to evade vaccines. However, there is no official word on this yet.
2. The response from different nations in terms of lock down decisions. A number have already imposed travel restrictions. We will be keeping an eye on this trend.
3. Tapering guidance. We are curious to see whether this event will cause the Fed to slow or halt their taper plans for now.
Stay tuned for next week's ES/SPX plan.
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