The M.O.A.T. — “Mother Of All Trendlines” in the SPY — Show Me The Money!!!

| Who here saw it coming? I won’t say I was 100% right because I wasn’t, but I DID trade MY assumption with some unbelievable results! Share your successes and challenges! Next week’s analysis included!

Ok, here was my disclaimered prediction for last week’s market activity:

And here’s what SPY ended up doing:

The SPY took a bounce at the 200 EMA (red line) with a momentum reversal to high open interest at the $430 price level (blue line). The current position of the MOAT is $425.

Where do we go from here? Well, that’s what today’s article is about! In this article I will share:

• This Week’s Results with 500% Profits
• Personal Analysis for First Week of October 2023
• How I Plan to Trade with my “Guesses”

Now is a good time to mention I am not a professional trader — I’m a personal retail trader. My day job has 0% to do with finances, it is just a hobby for me and, perhaps one day, an escape from a 9-to-5 job. I have some physical issues with my body that are making it hard for me to do what I do (I’m a dentist), so I am in constant search for ways to create income from home. Trading options has been the most lucrative!

NOTE: DO NOT TAKE ANY TRADES MENTIONED IN THIS ARTICLE — EXAMPLES ONLY. PLEASE DO YOUR OWN RESEARCH.

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Author’s Disclaimer: This is not trade or financial advice. This information is being presented for entertainment purposes and represents the OPINION of the author. All trading and investing, whether real estate, stocks, or crypto, involves the risk of loss, sometimes greater than 100% loss. Do not trade or invest with funds you are not willing to lose. Please do your own research. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit. Also keep in mind THIS IS A BLOG — NOT A NEWS STORY. This is like my diary of thoughts, and I consider it chronological.

This Week’s Results with 500% Profits

Wednesday 9/27/23 Screenshot. NFLX was trading early against support, so that was a near-term bullish trade against the bearish market. And IWM were OTM puts just not working out — I cut it loose at a loss.

If you want a detailed breakdown at how I determined last week’s activity and trade assumptions, please see my previous article:

Fibonacci Trading for 400% Day Trade Profits

I traded the week mostly with SPX Butterflies in order to limit my risk exposure and prevent share assignment (the SPX cash settles):

My favorite trade is the SPX Butterfly. It profits from time decay and “pinning” at the short strike. The max profit is calculated by the $ spread of the “wings” minus what you pay for the spread, times the number of shares. The max loss is simply what you pay for the Butterfly spread.

Please share your own successes and how you arrive at your assumptions about the market! What do you all look at that has been successful? I want to know!! :)

Personal Analysis for First Week of October 2023

I’ll be referencing:

• Technical Indicators,
• Institutional Option Flow,
• Dark Pool prints,
• and some basic fundamentals

to arrive at my market conclusions. I’m not saying I’m going to be right, but THIS is what I am basing my trades on for the coming couple of weeks! NFA :)

First some basic assumptions about Fundamentals and News:

There is basically nothing bullish in general market news. Financial gurus are warning of some kind of market crash due to a failing economy.

OK, so far, this tells me that the LONG-TERM TREND is BEARISH. So, even if we get a technical bounce off of a trend line or major area of support, the bullish bounce is likely short-lived, maybe to the next area or resistance (see below), before continuing the bearish trend to support.

Let’s look at Target Prices from various Technical Indicators:

Here is SPY 3-Day (each candle represents 3 days):

Notice a squeeze has fired momentum to negative territory and the trend line is red (bearish).

Here is SPY Weekly:

SPY weekly trend is DECREASING positive momentum and trend line is red (bearish). The yellow candles indicate a mixture of buying and selling and NOT primarily one or the other. If the Weekly candle turns red with momentum in negative territory, that could represent a high conviction bearish trade on the Weekly.

And finally, here is the Daily:

Notice the oscillators are appearing to level off, from price taking a bounce at the trend line or “M.O.A.T.” But yet, the trend line is STILL RED!

So, looking at multiple time frames, the long-term trend in terms of days to weeks is still considered BEARISH, but the Daily suggests we might get a bounce, maybe even a short cover to resistance.

Before we look at price targets for trades, let’s just take a glance at Option Order Flow and Dark Pools:

I am wanting to know what Smart Money thinks about next week ending 10/6/23, so I’ve sorted by Expiry (left). Then, on the lower right, the weekly volume is puts > calls, causing the Put Flow Gauge (top) to show up as “Slightly Bearish”. $420 seems to pop up quite a bit, so we’ll stow that in our minds as we consider Price Targets.

This is Dark Pool prints from InsiderFinance. You can see volume levels, and a heavy volume of orders at $425.79. Therefore, the $425 level (MOAT) could represent a significant level of support, on SPY’s way down to heavy open interest at $420 — notably BELOW the M.O.A.T.!

On the Daily, we see heavy support at $425, $430 and the next level of resistance at around $433.

Let’s now look at probabilities with something called Quant Pivots from SimplerTrading.com (Simpler Trading is a small group of Professional Traders and Educators — good stuff! Learned a ton from them!!)

This is Think or Swim (TOS). The long lines are simply a Fibonacci retracement. And the shorter horizontal lines are called Quant Pivots which are something like ATR. Notice the bottom oscillator called the Ready, Aim, Fire indicator from SimplerTrading. It shows an “Aim” in green and a green and pink upward arrow. This measures something like buyer/seller exhaustion. The first dotted red line to the right is the first level of resistance, that happens to line up with a Fib level at $433 … sound familiar?

So, what this tells me is that SPY took a bounce on MOAT, momentum has momentarily reversed to Bullish due to seller exhaustion, but that the near-term Price Target of Resistance is $433, maybe even targeting Oct 6 expiration.

Then, since the longer term trend is still Bearish, that I will look for support at $430 again, then $425. If it breaches $425, then the next Quant/Fib levels are $421 and $415. I wouldn’t expect this bearish trend to continue until either end of next week, or the following week. Capiche?

How I Plan to Trade with my “Guesses”

A lot of times I look at the IV on the options chain, because that is the IV price move being priced into options. It tells me the range of price that Market Makers expect price to go, although it can go beyond or within these levels.

So, looking at that image, SPY is already expected to trade $425 — $430 range. But, didn’t we already establish a near-term bullish bounce?

Certainty is IMPOSSIBLE, here are my assumptions and Not Financial Advice — Just My OPINION:

• SPY could take a bullish bounce to $430-$433 Resistance.
• I expect a rejection at this $430-$433 range, and resume long-term bearish trend.
• After that occurs, I’d consider targeting $425 for maybe the end of next week.
• After Oct 6, I would, of course, re-evaluate levels and momentum, but if the bearish trend continues as expected, the following week’s target could be $421 down to $415.

I could trade this in a number of ways. I’d, of course, try to limit risk exposure by correlating these with SPX and risk-limited spreads like the Butterfly or Debit spread.

When price is surging (long candles), I sometimes consider selling premium with credit spreads. And when option prices are too expensive, I often to debit spreads. For single leg options under $1, I typically just buy the single leg option.

We’ll see if I’m right or wrong next week and share my trading results. Everyone’s trading accounts are relative. People with large accounts can trade high dollar amounts but still lose. So instead, shoot for percentage gains and shoot for limiting losses. I’d always rather break even or escape a bad trade with low losses, than to let a wrong assumption carry me deeper and deeper into loss.

Stay Tuned for Next Week’s Results!

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~Ryan @ BlockStoxx

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