SPY trading plan for October 22, 20241. Market Overview:
Price Closed at 583.71: SPY closed near its recent highs, suggesting overall bullish momentum, but the presence of the sell signal on the chart indicates a potential short-term pullback.
Momentum Slowing: Both the MACD and the yellow histogram bars are showing a decline in momentum, which indicates caution in the short term.
Major Support Levels: The key support to monitor is around 581.50, which has held throughout the previous sessions.
2. Bullish Scenario:
Trigger for Long Entry:
Look for a bounce above 583.50–584.00: If the price finds support above the red moving average (around 583.50), or even better, if it clears the recent high of 584.00, this could be an indication of strength, signaling a potential long entry.
Buy Signal Confirmation: Use shorter timeframes like the 5-minute chart or 15-minute chart to confirm if a new buy signal appears. Ensure MACD or momentum indicators on shorter timeframes show rising strength before entering.
Trade Entry: Buy around 583.70–584.00 only if momentum reverses upwards.
Profit Targets:
First Target: 586.00 (Recent highs) – set a profit target around this level if the market continues to rise.
Second Target: 588.00 (Extension target) – If momentum picks up, you can aim for 588.00, but be cautious as this could be a stretch.
Risk Management:
Stop Loss: Place a tight stop-loss around 581.00. This level is near the dynamic support of the red moving average and the previous session's support.
Trailing Stop: If the price exceeds 584.00 and shows strength, consider using a trailing stop of 1.00 point to lock in profits while protecting against pullbacks.
3. Bearish Scenario:
Trigger for Short Entry:
Watch for Weakness Below 581.50: If the price breaks below 581.50, and the 30-minute signal chart confirms a sell signal, it would be an indication to enter a short position.
MACD Confirmation: Ensure that the MACD on the 30-minute chart stays negative, or check for a sell signal on the 5-minute chart to confirm momentum is moving downward.
Trade Entry: Enter a short position around 581.50 with confirmation of a bearish setup from multiple timeframes.
Profit Targets:
First Target: 579.00 – This level marks the next major support zone if the market pulls back significantly.
Second Target: 576.50 – If the downward momentum is strong, this would be the next major area to consider for taking profits.
Risk Management:
Stop Loss: Place your stop-loss around 583.00 if entering a short position. This gives some room in case of minor fluctuations above the breakdown level but protects against a full reversal back into bullish territory.
Trailing Stop: Consider using a 0.75 point trailing stop to manage risk as the price moves in your favor.
4. Intraday Strategy:
Morning Setup (9:30 AM – 12:00 PM):
Observe the Opening Price Action: The first 30 minutes will be key to understanding if the market continues the bullish momentum or begins to retrace from the recent highs.
If the price stays above 583.50 in the first hour and signals align with buy indicators on the shorter timeframes (5-minute chart), consider entering a long trade.
If the price starts to break below 581.50, be ready for a potential short opportunity and follow through with the short strategy outlined above.
Midday Trading (12:00 PM – 3:00 PM):
Monitor Consolidation: SPY may consolidate between 581.50–583.50 in the middle of the day. Look for momentum signals and volume increase as indicators of the next move.
Use Smaller Timeframes: Focus on the 5-minute or 15-minute charts to spot any changes in trend or breakouts from this consolidation range.
Afternoon Setup (3:00 PM – 4:00 PM):
The last hour of trading can often bring increased volatility. If a breakout occurs in either direction, enter a trade using the strategy of either buying above 584.00 or shorting below 581.50.
5. Additional Considerations:
Look for Divergences: Pay attention to any divergences between the price and the momentum indicators (e.g., MACD or RSI). For example, if the price reaches a higher high but momentum is lower, this could signal a false breakout.
Monitor Broader Market Sentiment: Keep an eye on overall market sentiment and external factors that could affect SPY’s direction, such as macroeconomic news, earnings reports, or changes in interest rates.
Summary of October 22, 2024, Trading Plan:
Bullish Trade: Buy around 583.70–584.00 if upward momentum is confirmed, with targets at 586.00 and 588.00. Set stop-loss at 581.00.
Bearish Trade: Short below 581.50 if weakness is confirmed, with targets at 579.00 and 576.50. Set stop-loss at 583.00.
Morning and Afternoon Focus: Watch opening price action and volatility towards market close for optimal trade execution.
