Compression Tightens Again As The Dow Steps Forward To Lead The Bear Charge

Market Snapshot

The Dow steps out of line while everything else keeps squeezing.

The Dow has broken ranks and begun descending in three orderly stages. The other indexes have been notified and are considering their position.

Looking at the snap view the compression in price continues, but I think the Dow may be attempting to lead the bear charge with a clear 123 pattern, drop, pause, drop, as Sam Seiden used to say. What we would want to see is a sharpish move down away from this level to get the party started. I’ve taken some speculative puts on both DIA and SPY, just in case 😉

• ES 7,770.50, +0.22%. Sat under the NATHs, still pinched.
• YM 53,949, +0.08%. The one showing its hand.
• NQ 29,838.25. Compressing into the apex with the rest.
• RTY 3,044.6, +0.29%. Holding up near the range highs.
• VIX 15.31, +0.26%. Still nothing priced for a fight.
• GC 4,482.1, +1.23%. Back on the move.
• CL 82.84, -0.48%. Off the boil after yesterday’s push.
• BTC/USD 63,892.79. Chugging sideways.

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SPX – Up to the highs, then slowly lower all day.

SPX swings ran up to the range highs again and moved slowly lower all day.

A push below 7700 will give me my breakout attempt and of course a fast move lower in price will indicate what I’ve been suspecting. It’s really just a case of will there be any trending follow through or a snap back inside the range, and watch the shape of it evolve and mutate.

A push below 7700 and we find out which one it is.

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RUT – Lower swing highs, higher swing lows, and a coil that has to release.

RUT once again looking similar, rally higher and holding near the range highs. Lower swing highs and higher swing lows telling me we have prices continuing to compress further, which in itself could indicate the potential for an explosive breakout.

A non directional way to play that could be on IWM with a long strangle at the 30 delta levels, an old strategy but a goodie for such situations. Or wait for the breakout and play it in the usual way.

Compress, compress, and then go somewhere in a hurry.

Crypto – ETHBTC – Bear closed, flipped bullish on the v-entry, targeting the highs.

ETH/BTC the bear swing was just about done yesterday and I did indeed close and flip from bearish to bullish on the v-entry and reversal off the range lows, which I discussed on yesterday’s analysis and video, targeting the range highs. Nice and simple.

Closed the bear, flipped the bull, off to the range highs.

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Premium Poppers

Rejected off the highs, a 1st breakout bear, and the profit locked a different way.

The Premium Poppers were once again fun and I joined that fun with my chicken soup fuelled analysis from the morning, keeping my attention or lack of it on SPX.

There was an initial pre market push higher in the futures which was rejected off the range highs, and there is something similar happening now as I type this. My second trade was your classic 1st breakout, also bearish. I did play around with a 15 wide spread to back up my conviction on the bear trade.

It’s not quite a Fly – its and Iron Fly. This iron Fly is similar in the risk profile, with a guaranteed profit floor of $1,200 and up to $1,700 in the profit tent.

5 wide pre market, 15 wide call credit spread during the regular session. Instead of adding the debit spread and creating a butterfly, a call credit spread was added to lock in the profit with an Iron Fly. Different action, same result, profits locked.

…and of course the community is once again grabbing a full bag of premiums.

• Bill B. Closed RUT Bull 20 ORB for 30%
• Bill B. Closed META Bull 20 ORB for 30%
• Richard H. SPX BO3 ATM SS7745 lock in win for $0.70 transformed into a butterfly. “Recovered most of yesterday’s loss. Looks like it has more to go, as it’s only done 30 points total move, but it has been such a slow day, I am happy with the $0.70c.”
• Chris T. SPX 1st BO eventual winner after a few losing days. I’ll take it. +$60

Well done Bill, snagged a similar trade on META, highlighting what I often say, that these patterns do work on other instruments and they did start their life with me back in the early noughties (2000s) on forex, then futures, then stocks.

And for members there is a walk through of the variations for stocks in the “At the Open” stock trading course inside the strategy library. My preference remains on SPX and this latest strategy is adapted for that.

A full bag of premiums, and the patterns travel.

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Fun Fact

Since I mentioned being knocked for 6, here’s the bit that gets lost in translation.

In cricket, six runs are scored when the batsman hits the ball clean out of the playing area without it bouncing, and the bowler on the receiving end is the one who is said to have been hit for six. So the phrase is told from the loser’s point of view, not the batsman’s. The colonials named their version after the bloke who hit it. We named ours after the bloke it happened to.