Edge Update, Monday's Price Action, and Plan for Tuesday
Edge Update
Hi all. Sorry for not publishing yesterday. I’m a bit under the weather.
Had bugs in edge that prevented plan creation yesterday that I resolved last night and released. It was also preventing the algo generation of plans, so good to have it back.
One thing I am noticing with recent price action and the algo is that the algo attempts to get the best price possible, but lately, once the turn has happened, the contracts aren’t getting the discount dip that it has in the past so one may have to adjust the entry and stop plans. I’ve been using the plan generations algo to identify sell targets and that has been working nicely.
One improvement that is need is adding some smarts around the targeting. The challenge is, how to get edge to know if targeting vwap/1 level move or when target for day range breakout higher or lower.
When using Edge to plan, be sure to modify the idea targets for what price levels you expecting the underlying stock to get to. Edge will handle the rest for finding good risk/reward contracts and entry/sell targets.
Monday Price Action
As I posted on Saturday, 410 held (with a gap up) and is no pushing toward 418
We are getting some interesting price action. SPY got a gap and go move. I wanted a gap fill before going long but it held 412.80 strong after lunch and then broke hod to run to the level above.
Scanner caught this action during lunch. It appears that the 4130/4120 puts may have been premium selling. How does one identify that? I’m still working on improving the logic to recognize that, but one clue is when the contracts are being bought at into highs instead of into lows. Also the volume came as the contracts were pushing into vwap.
The 4160c buyer made bank. there was an almost 50% dip from $3 down to 1.65, as SPY made a faker dip at 1pm, but then quickly ripped off lows, consolidated and took out high of day.
As SPY started breaking 414, call volume picked up considerably.
Clicking the contract brings up some algo generated plans for the specific contract.
Not bad. Entry and T1 sell targets met. T2 didn’t but T1 was still got us 3R-5R!!!
One of the interesting things to note from yesterday’s PreMarket Prep was how quickly META, MSFT, and AMZN rallied. these were earnings “winners” and had pulled back to give good entries. If market rallies after Powell on Wed look for these names to continue higher.
Also of note is how TSLA broke 200 and continued to act weak. If it can’t reclaim 200 quickly today, it could be headed to 180s or less this week.
Notice how NFLX held vwap yesterday, that was the clue for SPY had the potential to take out high of day and rally.
What I’m looking for on Tuesday
Premarket back tested 414 on SPY and now pushing back over 416. Ideally get a dip on open into 415 to 415.50 and then rally into 419-420/ the 9ma on the daily and 420 being a key level. I will be looking to go short there ahead of FOMC and seeing derisking/profit taking ahead of the Fed. Don’t know if we get there today or tomorrow morning or if at all, but for now it is definitely on deck.
Watching for failed breakdown reversal if market rallies, but boy is this looking weak
Looking 10-15 more points of upside developing this week if market holds up
Almost recovered e/r dump, if it does push over 308, 315+ can come
Reclaim of 410/ failed beak down reversal on 400, has this positioned for a bigger move to the upside in coming days (as long as market doesn’t dump again)
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