For Followers (SPY Data) (Advanced)

Good morning all,

I hope everyone is doing well and I am going to try to keep this breif and highly informative. You can see my thoughts about the market at the bottom. Please feel free to reach out with any questions!

We used to chart the SPY frequently, but since I have started researching Cryptomarkets, my focus has been away from the broader markets. So let's take a look at where we are at.

SPY Weekly

As a quick recap:

Purple Boxes: February trends from our previous Deep Charts article.

Teal Lines: The trendlines

Arrows: Shows the Feburary sentiment / my market outlook based on price action

As most traders and investers know, right now we are trending higher and have broken the previous ATH on the spyders. We called the cup and handle play last summer, which played out exactly how we thought it would and I said I would submit my resume to investment firms if I got it right lol. I haven't done that yet, I apologize.

There are two areas of possible support.

The 487.10 level (confident)

The 493.04 level (OK confident)

This is due to the rejection off the 487.10 level, then retest, then further rejection off the level to the upside.

We also had a retest of the 493.10 level over two weeks and rejected to the upside.

This week we had CPI drop, here is what we know.

What we know that CPI came in hotter than expected due to shelter and transportation costs.

You can view the data here

Regardless of the data, let's look at how the SPY played out on the day

SPY formed a bear flag which played out around our "reversal o'clock" or around noon-2pm.

SPY Daily

We can change the trendlines to look something more like this.

I chose to chart like this because the price rejected off buy side liquidity around the 470.00 psychological level.

SPY 1 Hour

We rejected off sell side liquidity at the highs in anticipation for the first CPI data release of the year.

I think a huge reason why some sellers came in here is due to the ammount of bad weather certain areas have been enduring in the US. As it is the winter, the cost of utilities is on the high interms of heating and water. What this translates to is an increase in demand for natrual gas.

To chart supply and demand, it will look something like this.

Where supply, other wise known as sell side liquidity, attracks the price to the upside as sellers want to enter the market at the highs. Similarly to demand, otherwise known as buy side liquidity, is formed due to the price being cheaper and more affortable.

From the CPI data, we are able to realize that the cost of Energy related consumables is down from the previous report.

That is reflected in the price, for example, of Natrual Gas Futures.

Now this is not entirley bearish. This actually helps the economy, and demonstrates it's strength. Although inflation would like a weaker economy, the federal reserve is not looking for that. They want to see strong growth while remaining moderate in their policy restrictions. Jerome Powell wants spending to come down not just in the overall markets, but primarily in needless applications. With gas prices coming down, buyers are able to have more cash flow in their budgets for other spending without the worry of being in serious debt just to heat their homes. I know it sounds confusing and contradicting, but from my research the economy wants a strong ability to spend, but weak spending habits.

This means no needless spending, to be able to spend more on what matters.

Let's get back to the charts because I know some of you might have noticed a pattern forming.

This is the 30 minute time frame on the SPY.

Not every inverse head and shoulders looks perfect, and it usually takes a few days to play out, but it certainly looks like we might be forming one right now. MooMoo charts also helps with its appearance.

What you should take into account first is the volatility on the day. The inverse head and shoulders looks alright for now, but I don't anticipate seeing any big moves today. I could be wrong, it is still early in markets. However, I think there will be a sizable move this week. If we trend sideways today and tomorrow then it looks more bearish to me.

SPY 15 Minute Chart

I think user 73104655 is correct, where we might be forming a bearflag on the day.

To those who saw my post after market close yesterday, you know what I am about to talk about.

I did some research and I was happy to find that I was not mistaken in yesterday's open put interest. It was the highest in history, a strong indicator of where markets are headed in the short term, possibly.

At the time of writing, huge put sweeps are hitting the tape.

There is some other notable options flow I think is worth mentioning as well dating from the 15th of March to the 28th of March.

Let's take a look at some dates with "normal" open interest to compare.

I am actually interested in today's expiring options interest. Could we see a rebound? Forming the inverse head and shoulders tomorrow or even today? Not entirley sure at this level.

Alright, now let's see about the Put/Call Ratio.

How I read this chart is by saying "more puts than calls" or "more calls than puts". Since we know the basics of supply and demand, it would make sense that there would be more puts than calls at the high of the blue trendline, and more calls than puts at the lows of the blue trendline. In other words, we are looking for a "skew" in the trend line. Where the trendline gets high, the ratio is thrown off in the favor of bearish sentiment. Where the trendline gets low, the ratio is thrown off in favor of bullish sentiment. If investors believe that there is going to be a large move to the upside, they will close their short positions and open calls. This would change the ratio of puts/calls where there would be less puts, and more calls. The further away the trendline is to the daily candles, the wider the ratio, and the closer the trendline is to the daily candles the tighter the ratio is.

Take a look at when the trendline moves with, or reaches the candles. There is much less movement in price relative to when the trendline is further away. Let me give an example of how I would take a position based off this chart.

Gold = Trends / Support / Resistance

Magenta = Areas of entry interest / sentiment counter for confidence

Yellow Arrows = Entry based on trends, blue trendline of put:call ratio

Gray = Interpretation of put:call ratio

O.E. = Over Extended

The key is to only enter when there is either resilliance in put or call open interest for confidence in a reversal, when the put:call ratio counter is more than 1 for confidence in continued order flow at areas of support or resistance, or at the bottom or top of the trend, and the blue trendline must be far away (or resiliant as mentioned) from the candles. I have not done any backtesting on this strategy, but from a glance it looks powerful.

Where we are right now I would not enter a put position or a call position as the blue trendline has reached the candles and shows no sign of decent overextention yet. Even if the prices moves sharp to the downside, I would not rely on a single spike of the blue trendline. I want to see an increase, or resilliance, of put open interest. then I would take a position if it also worked inconjunction with other charting or research done to support my decision whether to place calls or puts.

A complex process, but I will look into this strategie more before I post further articles on it.

If you know me, I never encourage anyone to take a position based off my research alone. I want to provide educational articles that others can use to become a more knowledgeable trader. Some things I say might not be anything new to you, and that's alright. I apprciate all the support from my followers and today's article is to show said appreciation.

I think the market is headed for incredible volatility.

Not only that, but credit card debt is higher than it once was in 2008 ADJUSTED for inflation.

Compare that to the housing affordability chart.

If you are looking to purchase a new home, most first time buyers take out a loan. However, how do you get a lone? Most banks, before approving homeowners for a loan, will pull your credit score. What your score tells the banks may affect the type, amount, or payment plan of / for the loan that you recieve. Based on your where your credit score is, which also tells the bank a degree of which you are a responsible spender, you may either qualify or not for that loan. Of course there would also be interest on that loan, almost nothing is ever 1:1 when it comes to borrowing money from the bank.

Credit cards are commonly misconsepted as "free money". Where in reality, credit cards are 100% debt. If you just took a loan out for a house, or car, and the interest rates are too much for your current savings where you decide to pay with a credit card with a higher limit, but can't afford the payment, then you are in debt. In some cases, even more debt if you were to miss a payment among other aspects such as paying only partial the amount for the reoccuring fees. In both instances, you will be paying interest on the debt of the balance you owe to the bank.

This ties back in to what I was saying earlier about CPI. Jerome Powell wants people to spend with a purpose, so they can have the ability to not only purchase the essentials, but to live their lives by being able to purchase non-essential goods and services such as a new TV or something.

If individuals are in debt due to the inaffordability of their own home, car, loan, or other expendature, then there's a bubble. How can the economy be improving in other areas of spending if there is so much overall debt? This is why Jerome Powell has such a hard job. He needs to balance the inflationary rates while being mindful of spending habits relative to debt, affordability, and many more sections of the economy. A sort of "paycheck - paycheck with debt" bubble.

I will talk more on the bubble I am beginning to understand more of, but for now I think that the spyders are weak. The market appears strong, but there are more avenues for downside than there are upside. That might not be a complete indicator of where I think the market is going, but ultimately we are going to see some incredible volatility. Also, I think it is worth commenting on some historical events. Whether or not they contribute to the bubble I have not realized yet.

Historial Never Happened Before Events

- SPY All Time Highs

- Credit Debt All Time Highs

- Housing Affordability All Time Lows

Thank you for reading! I hope you are all making money today and enjoying your time in the market. If you are new to my articles, MooMoo or even investing, welcome to the markets! As I mentioned, I will not be posting any tags. However, I may update this next week or in the following days. But the followers get the research first. Thank you for all the support. Look forward to more SPY, BTC and MATIC charts