ES [S&P 500 FUTURES]
As expected another week of nothing but rallying on ES. Going forward, looking at the COT, there’s a slight pullback on the side of hedge funds this week + a small uptick on the sell side of the market. Not sure if that is going to manifest immediately, if at all, but we have to be ready for any and all contingencies. Now that we have broken out the sky’s the limit, and quite honestly we do not have an interest in any prolonged shorting.
Friday closed into a lower high and unless the high gets broken on Sunday the pullback could begin from there. Any and all pullbacks for now are to be viewed as nothing more than a chance to get long on the dip. Immediate demand levels below at 3450 and 3400 that we could play should price find its way there. On the other hand if ES breaks out yet again and holds 3510 as a new buyer’s zone we go long from there.
Always have both scenarios in mind so you can play accordingly. Weekly and hourly chart overview included, and for more detailed levels we are going to be updating as the week progresses.
SPX: 3550C are long for 9/04 while 3500p, 3480p, 3450p are long for 8/31SPY: Darkpools: Above: N/A; Below: 349.69, 348.22, 344.05
VIX [CBOE VOLATILITY INDEX FUTURES]
Not much change in the COT data for VIX futures, however the chart is painting a picture. VIX futures got rejected at 29.5 supply that we have as was expected, however we did see some buying. If VIX futures manage to claw back above 30 then we switch to extreme caution.
For now VIX futures are wedged in between 29.5 supply and currently retesting the break out of trading range at 26.3. If 26.3 gives out and gets turned into a seller’s zone then we could be looking at a gap fill further down, however if it holds buyers might swarm and start bidding it up from there.
Hedge funds going short the entire week in the U.S. Dollar. Small specs unfortunately went long, as it usually works out. There are 2 scenarios as of right now that could workout on the U.S. Dollar. The most important part is going to be the low at 92.12. If that low holds then the U.S. Dollar could pick up from there to retest the supply above again.
If that low breaks we are looking at a potential drop all the way down to 91.5 The supply at 93.5 did sell off the Dollar as was warned in the last newsletter. This time around it’s all about 92.1. If that level holds we go long, if that level breaks and upon retest it remains a seller’s zone it’s the perfect short.
Hedge funds were essentially buying Bitcoin last week. Bitcoin had a jump at our demand level as expected however it is now stuck between demand and supply on the daily. The levels we are looking at are annotated on the chart, however with hedge funds flipping to buying again we are more interested in seeing the above supply get turned into a new buyer’s zone for a continuation up.
Supply at 11,800 area and 12,120.
If the 11,800 area gets held as new demand then we see Bitcoin potentially breaking out of the recent trading range.
BANK OF AMERICA
Major Banks looks like they are prime for a breakout this week. BAC is at the 200 ema resistance and nearing the trendline resistance; break out of that could squeeze higher to retest the previous highs at 29 area. Options flow indicate increasing bullish bets with 27, 28, 29 and 30 calls strikes with 09/18 expiry are heavily bought.
Simultaneouly, we see that the 26 strike puts are being shorted for this week through 10/16 expiry.
Expecting the bullish momentum to continue this week, BIDU could easily test the previous highs at 134-135 area. We see nice bullish call activity for 130, 135 and 145 strikes for 09/18 expiry.
Flow; not much interest in call, a good chunk of 3100p traded above ask. For the week of Aug 28 seeing bullish volume to 3300.
On the weekly chart Disney is primed and firing a long on our algo providing a buy signal. It may backtest and come back to 132-130 before bouncing and steam rolling towards the next fib at 148. Call volume feels the same way with 145/146calls long and 130p long for 9/04.
Our analysts are long with 140C for 9/04 @ 0.90 each.
Darkpools: Above: 138; Below: 133.90, 131.90
Very nice breakout early last week running from 270 to 306. Fib below at 289 and as long as it holds, FB could claw back and retest and claim new ATH and power to 310-312. Option flow is feeling the same way with calls long from 300-312.50 and virtually no puts long for the week of 9/04.
Darkpools: Above: N/A; Below: 293.66, 281
GS, for now, looks like the leader of the financial world. Relative strength. When the flow rotation begins to go into financials full on we think this stock has the biggest upside. To us, it looks like it’s in an accumulation pattern but it does need to break out and hold the top of the breakout as a new buyer’s zone to indicate that this indeed was accumulation.
For now we see an immediate demand where it is. If 206.6 on the bottom end holds we see a 210 potential and if that supply gets reclaimed it could go as far as 217. Bottom of the trading range is at 200 which is also where the impulse for this leg up began so that could be a good entry as well. On watch.
Darkpools: Above: 209; Below: 205.10, 202.60, 200.05
JPMORGAN CHASE & CO
With AAPL and TSLA stocksplits over with, money could rotate out of tech into financials this week. A cluster of option calls went long for 104-107 for the week of 9/04 and our analysts 105C in anticipation for this move. A potential retest of 101 could occur, but 101p have been traded at the bid / likely shorted.
Darkpools: Above: 103, 106, 111; Below: 102.50, 101, 100
A lot of hype is still behind MSFT planning to buy TikTok. The sale needs to occur and quickly. The back and forth seems a lot like the Trump trade war Tariff cycle with China. Technicals don’t see to be playing a factor anymore and it’s all about what the market wants to price MSFT at. Option chain is long 230-260C for 9/04 should the sale happen. At the same time, 225-220p are long 9/04 should the buyout be a bust.
Darkpools: Above: 228.75; Below: 226, 221
NKLA is just holding below the 50 ema line. Break over that we can see a potential gap fill towards 50 area. Options this week are pointing to a bullish momentum to continue. With call strikes from 55 through 75 being net long for 09/18 expiry.
ROKU made a new ATH, however closing underneath the top of the trading range. If 174 gets reclaimed then we might see a new leg up. For now however we have our eyes on a pullback down to 160 level demand. 158-162 to be precise with the zone.
If that area gets tested and held as a new buyer’s zone then ROKU might have potential to get to 180. Underneath that area though there is an untested gap at 148, and an untested demand zone at 135.
Darkpools: Above: N/A; Below: 163, 162.50
STM sold off on thursday from the previous highs around 31 area. There is still a potential to break over that and retest the 52 week highs around 32 area. Options have been heavily bullish on 30 and 35 strikes for Sep and Oct expiries.
Twitter is potentially breaking out of the previous highlighted resistance range. If the bullish momentum continues, we expect to see a test of the previous highs around 44-46 area. Bullish bets are being placed near the money strikes of 40 and 45 strikes.
Great beat on earnings but created a large significant gap between 238-219. Little to no resistance as it’s in clear blue skies. Next fib resistance is at 260.51, WDAY will need to keep money flowing in if it wants to test it.
Puts are non-existent for next week while calls for 300 are long 9/18. This could be an exceptional long play by taking 9/18 275C.
Darkpools: Above: N/A; Below: 192, 190
A strange partnership was announced on Thursday with WMT joining MSFT to buy TikTok for an estimated 20-30B. Although this would seem like a smart move, if the sale does not occur, its very likely to hurt WMT stock price.
WMT jumped from 130 to 141 and could very likely continue to 143-149 as those calls are long for 9/04. Based on the option chain if the sale does occur, stock price could easily plummet right back to 130 with those puts long for 9/04.
Darkpools: Above: N/A; Below: 136, 131
Phenomenal breakout on Friday 85 to 93. With casino’s slowly opening back up, WYNN could start stream rolling it’s financials once again. On the daily our algo fired a long/buy signal and we could see WYNN get back to 108.79. Option chain feels the same way with 100-105C long for 9/04 and dated 135 for 10/16.
Darkpools: Above: 103, 109; Below: 91, 88, 87.50
Earnings are on Monday so this could really go either way. With all schools and a lot of corporations relying on ZOOM, it could beat EPS and Revenue. Trend based fibs say resistance at 313 and above that 339 then 365. Option chain feels the same way with calls long from 300-345 for 9/04. Puts are non-existent below 315.
Darkpools: Above: N/A; Below: 295, 268, 265
INDICATOR OF THE WEEK: ATR vs. DTR
We’ve been asked quite a few times about what the best way is to escape chop. Or just generally be ready for it. Our answer, same as always, is ATR.
ATR is included as an indicator with most broker’s UI’s, however there is another thing we could throw into the equation to make our chances of evading chop even better. DTR. While Average True (Trading) Range typically measures volatility with a lookback of a few days, it is immensely helpful to pit the Daily True Range against it to see just how it stacks up against the average range of a prolonged period.
This indicator stays tucked in the upper left portion of your chart and is not intrusive at all, while at the same time providing wealth of information.
WEEKLY TRADING TIP: Don’t Overanalyze. The Best Strategies Are The Simplest Ones.
We’ve all heard of them. The Elliott Waves. The convergence divergences. The abandoned babies. The hanging men. The graveyard dojis. The crouching tigers and hidden dragons and space butterflies born of Zeus and Mathilda…Listen. It’s cute. It really is. And dark. Abandoned babies?! Moving on…
Market has what? Buyers and sellers. Simple. Done.
At any point in time in the market there is either:
A. More buyers than sellers
B. More sellers than buyers
C. An equal amount of both
Why over complicate that? Keep it as simple as you possibly can. Create a trading strategy that works for you personally first and foremost. One of our analysts trades purely on price action with 0 indicators. We are not saying that is the best solution, all we’re saying is it is possible. It is possible to be consistently profitable, or not profitable with any strategy. Don’t fall prey to the analysis paralysis.
If you can’t explain your trading strategy to a 5 year old…It’s probably not worth trading it.