The Market (New SPY Chart + Indicators + Sellers Giving Up In Extra Innings) (7/3/2024)

Good morning everyone and welcome back to The Market! Today's edition is a special one for the Followers and all of you who come across this post. Regardless of whether you are Following or not, I hope you are all enjoying your theta week in Markets.

As mentioned, this post will be a bit different. I have gone ahead and updated my SPY chart with new levels and new indicators I want to share with all of you! Don't worry, I will also be posting the charts as well. So let's not waste any time and get right into it.

Before we begin, I want to thank you all for all the support and as my articles continue to grow larger within MooMoo I want you all to know I appreciate you. Now let's talk about the indicators.

Originally theorized back in 1950, this algorithm was introduced by Stuart Lloyd but it wasn't until 1967 where it finally became recognized.

K Means aims to use machine learning, data analysis, and pattern recognition to gague areas of support and resistance while grouping distinct clusters based on their similarities.

It can be used for directional trading, reversal trading, as well as risk management and can be used inconjunction with tape reading or noticing where the buyers and sellers are.

A usefull tool for pivot point traders and breakout traders on lower time frames.

Imbalance trading is a popular method of reversal trading where an asset makes a larger move to the upside or downside as a result of more by-side fills or sell-side fills than the former.

In other words, when the market makes moves to the downside with volume it is observed that not all orders of the opposite side or the current side filled. In this case, not all buy orders were filled due to the downside momentum leaving traces of liquidity ready to be filled to the upside. This is called an imbalance in the order book.

A powerful took for imbalance traders on mid-range and lower time frames.

A key fundamental of all markets is the strength of the buyers and sellers at any given price, area, or of any candle. Being able to tell whether or not the buyers or sellers are in control is absolutely invaluable to any trading plan and easily adaptable.

For example, yesterday's mid-day highs.

I also posted this yesterday:

From the indicator, we can see the IMMENSE pressure of the sellers with the buyers not really adding too much volume at the level. Despite the buyers lackadasical efforts, the candles showed no signs of stronger downside movements.

In other words, eventhough the sellers were entering the markets with volume, the buyers held their position and added more when they needed to causing the market to hold its price and eventually when the buyers did step in, larger movement to the upside was realized.

My point is, if you were to get short yesterday but were unable to see that when the buying pressure was high or low, regardless of how stron the sellers were, the buyers were in control all day and the sellers could not overcome them. Which would result in a loss for your position.

A powerful tool for traders who are in a position already looking to either hold / exit their position relative to the strength of the buyers and sellers, or have observed the trends in Markets on the day and are looking to see if they should enter a position along side whoever has the overall strength of the tape.

I would personally use this indicator on only the 5 minute, however you could use it on other lower time frames as well.

In addition to the indicators, I have also added new levels to my charts.

These levels are areas where the price rejected off of, was once resistance turned support, or have been areas before a larger move to the upside.

There is a possible triple top forming on the Weekly. Normally this would be a sign of a reversal which is complimented by an approaching overextended RSI. However, if the buyers can create new All Time Highs on the week or next week, we could move to the next Fibonacci level at $558.26. However there will need to be a larger catalyst, such as economic data, other than technicals alone for this move.

The Daily chart is also approaching a triple top, however if the buyers can fill the forming BOS, we might see another retest of the All Time Highs. Buyers will want to break and close above these highs and retest it to the downside for more upside.

There was also a weak bull flag up to this level that saw a rejection initially off the highs. The RSI is not overxtended yet so we might see a bullish continuation here if the buyers step up. There are lots of sellers here at this level.

There were many leftover sellside imbalance orders that were not filled on the move to the downside. The buyers pushed the price back up to these lingering sell orders and the markets rejected to the downside as they were filled.

Inversly, there are some buy orders down at the $544s waiting to be filled should the price fall back to the range. There is also a Fair Value Gap from $546.57 - $548.13 that might be acting as a magnet for liquidity. If the directions of the Market changes, this FVG will be the first to be filled.

At the time of writing, if the buyers can enter in with volume on the day or next trading day, then the 4 Hour could break out to the upside.

There are no notable structures here other than the VWAP is acting as support for more upside. Momentum appears to be slowing down at the level as sellers try to enter, but overall the buyers have control here. They will need to enter with more volume or the SPY could retest VWAP.

Slow and steady wins the race they say as the buyers slowly move through the large area of selling liquidity at the highs. Well, in the case of Markets, this is not true. Especially when the buyers want to break out to the upside. They will need to enter with more volume and quickly if they want to get past all these sellers. There are no notable structures on the 15 Minute, however the RSI is in an excellent area for more upside.

The 5 Minute chart reminds me of a Baseball game in extra innings. The away team is up 7-2 in the 10th inning and the home team is coming up to bat at the bottom of the inning. They will need 5 more runs to tie the game and 6 more runs to send the game into the 11th. However, in the back of their minds the thought of "It doesn't matter, we'll play again tomorrow" is spreading like wild fire throughout the dugout.

The thought of giving up home knowing there's another day to play ball, or in this case another day to trade, is what the chart seems like from the sellers. They really tried entering at the early hours in the markets, but the buyers were so strong and had such a large lead that they really did not feel like being "try hards" down 5 runs from 10:30AM NYC.

Thats the attitude of a sore loser, and the chart is suggesting that right now.

Look at the pressure of the buyers, and look at the pressure of the sellers. It looks like they gave up knowing the buying strength is so large, and with the early close in markets, these sellers might be thinking to themselves that they'll take the rest of the day off and come back on Friday with more volume to try and win the next game.

If this attitude continues, then there won't be much in the way of the buyers to take home a victory and close at the highs.

At the time of witing, there are 57 minutes left in the match and buyers contnue to score more and more.

However, they will still need to enter with more volume to get through the sellers on the higher time frames.

Sellers actually just entered with volume here, but from the imbalance indicator, we can see there are some leftover unfilled long orders that havent been filled. The buyers might enter and change the direction of the next few candles. The RSI is in a great area for more short-term upside which could translate to a breakout if the buyers can step up.

Thank you all for reading and I hope you all found this information somewhat helpful and informative.

Whether or not the sellers come back to tie the game at the close is entirley irrelevant. What is relevant is the close on Friday. As Markets are set to close early today and tomrrrow for the holiday, Options will decay much faster intraday. This leaves room for extreme volatility, or no volatility at all. Hence the importance of the close on Friday.

Here is the current chart

Buyers got stopped at the highs, and they might even take profit here leading up to the close. But if they don't and we see more upside, that should give us an idea of the strength of these buyers.

Updated Chart

Thank you for all the support, enjoy the long weekend for those who have Friday off, and whether or not you are impacted by the holiday, I hope you enjoy your day off from the Market. It is important to study the charts, learn about the Market, and research your trading strategies, however it is equally important to step away from trading and take a break.

Have a great rest of your day in Markets and I hope you all make some cash.

At the time of writng, the SPY is at 550.69