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Right Down at the Gamma Put Walls -Mar 5, 2021

MARKET COMMENTARY – Fast moves often bring reversals- AGAIN. The traders breached the zero gamma level early yesterday at 3852. This is going to be the level to breach for buyers to resume some more pressure. We are just above the put wall and right at the option short put sellers. We should see buying pressure here as we have into the 3772 after dipping 60 points lower.

3800 is the line to recover as buyers, else sellers are still in charge. When we see news about the bond markets, we need to keep on high alert. Remember that credit rules the world.

As always, we will listen but not assume the news will do something- it remains important to follow quickly and not predict.

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Notice our key lines of support
  • Considerations
  • We have another weekly close lower than the prior with a rising VIX
  • Buyers are trying to recover critical gamma levels near 3800
  • We are watching sector rotation from tech continue
  • We have tested the put walls which bring buyers when this combines with the gamma level put walls

If you are newer, read The OODA loop. If used properly, it will confirm you are seeing things the right way. It is far better to be out of a trade you wish you were in than being in a trade you wish you were not. Stay present and in the near term, and pay attention to the players before you decide on a plan. BE PATIENT AND WAIT FOR YOUR PRICES to give you the edge. Intraday formations are the ones governing the charts – so use them.

Remember your OODA loop – OBSERVE, ORIENT, DECIDE, ACT

  • What do you see?
    • This means -what is the current battle at play?
  • Where were the buyers last engaged if they were value buyers?
    • This means -where do we see the congestion that leads to a bounce?
  • Where were the sellers last engaged if they were value sellers?
    • This means – -where do we see the congestion that leads to a fade?
  • Who won the last strategic price battle- buyers or sellers?
  • Have we tested significant levels of support or resistance?
  • What is the relative trend?
    • This means – relative to the day at hand, who is forcing the most pressure on price?
  • Have you established risk relative to –
    • 1) the last battle won and
    • 2) the relative trend?

PAY ATTENTION TO YOUR STOPS.

OPEC+ extends curbs.

Watch the VWAP to help you with the strength of pressure. The loss of the VWAP will force some selling action, and the breach above the VWAP that holds will bring buyers to attempt stronger positioning.

INTRADAY -Keep an eye on the daily resistance and support that we discussed and expect battles at these regions as buyers have a lot to prove to maintain bullish price flow on monthly formations- technical damage is present but likely to be repaired on this large time frame. BIG time frames will help you position with the wind at your back.

Deep dips remain staging grounds for buyers- quick strikes to support and back to resistance appear to be the highest probability for success today- dips could certainly get deeper and spikes could get higher as price action shifts.

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This week’s calendar

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Econoday Calendar for this week

********If you feel you need some help understanding how price moves, remember you have the COACH’S CORNER for video review.

THINKORSWIM USERS –Chart share links for ES_F , NQ_F , YM_F , CL_F , GC_F – levels here for download to the ThinkorSwim platform-to be updated later today

LINK FOR THE TRADING DATA EXCEL SPREADSHEET

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TRADING LEVELS-

If you find yourself being chopped up, widen your time frame or take time away from your screens. This is a time when less is more.

TRADING VIEW & ACTION PLAN
Pullbacks can be deep-once support lines get lost – the lines will shift. Buyers are in a battle to resume dominance.

Intraday LONG trading from support edges like ABOVE the VWAP or tight moving averages will give you the least risk event for engaging – removing your trade at resistance will allow you to participate – understanding that countertrend bounces can be swift and sharp but will likely fail under the broken structure of the market.

Intraday SHORT trading from resistance edges like the old highs or bigger moving averages will give you the least risk event for engaging. Follow the candle trend until candles stop breaking higher.

Here’s a link to the METASTOCK software– you can have your own copy of Metastock to run these tests and setups using Target Rich Trades.

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