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Yearly Vwap + 200 Day
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Morning everyone. Today is Friday, November 6th, and first off, let me say this: my sincere apologies for this trade plan coming out late this morning. After yesterday’s intense move — the biggest move we’ve seen since COVID — I had to recalibrate everything, and it set me a little behind in getting you the proper analysis. I thought it was worth taking a little more time to get you a high-precision trade plan rather than rushing to get you something that would provide mediocre results.
With that being said, yesterday was an amazing day in the trade plan. We actually called the short on Wednesday, when we talked about the 7740 area being a massive short spot — I even put out a tweet asking everybody if this was the right spot. It’s amazing how many people did not respond, and how many others were still looking bullish, as we were ultimately looking for more lows and targeting 7442 yesterday. We got that and then some, ultimately making it down to our higher target, the 200-day moving average. It was an incredible display of trade plan perfection. However, I heard a lot of people complaining that they didn’t hold their trades long enough — and I was certainly one of those people, as this was an unprecedented move that hasn’t happened in over six years. So please be kind to yourself, because it’s hard to prepare for such an outlier of an event.
We have sat at the lows all night, holding the 200-day moving average, which is an absolute monster, and the yearly VWAP, which is a pretty incredible marker for us, as we have not seen the yearly VWAP in quite some time. ES has basically been balancing sideways all night in an accumulation fashion and is primed to pop a little higher, only to get smacked again. Just know that we are holding a massive Daily support below us, and a push below it could easily send us down well over another 110 points.
A Note on Today’s Market:
News: We come into the morning with Red Tag news — naturally, one of the biggest Red Tag events we have all month. Average Hourly Earnings, the Non-Farm Payroll change, and the Unemployment Rate all hit at 8:30 a.m. pre-market.
Volume: Relative Volume is increased by +20%, which could give us a little more of a boost today. Using our relative calculation, that gives us approximately 72 points left above or below the overnight highs or lows.
Range: Expected range of 165 points, and we have already moved 105 points in the overnight session, leaving us approximately 60 points above or below the overnight highs or lows — closer to 72 points with relative volume factored in. This is absolutely possible, given the extreme volatility and an outsized, outlier move that is more than likely not done yet.
Gamma: We are still in Negative Gamma territory, meaning we have extreme downside positioning from our dealers. But please know that we are also skewed extremely heavy to the put side, and this could provide an opportunity for a squeeze. When people get all offsides like this, we tend to find ourselves in a position for a possible pop, only to get smacked again.
Trend: Down. We are down on the Weekly, Daily, 4-Hour, and 1-Hour timeframes, just as our process has been telling us for weeks, and there is no reason to believe we won’t continue to move lower.
🧠 Current Market Context
The Oversold Knee-Jerk vs. The Downtrend
We had two “history says” posts come out yesterday, including a perfect storm, meaning a massive number of oversold indicators have gone off. These have been extremely good at providing us with potential reactions, and generally after a massive move down like this in the S&P, we can usually expect a knee-jerk reaction. However, I still believe we need to be extremely careful here, because it is my belief that we are not done with this downside move. Any pops, in my opinion, are still shortable.
