ATM Trading Club Newsletter

Monday, June 17, 2024

Bull Run is On—But Beware of the Slippery Road Ahead!

The SPX found support at 5420 on Monday and surged to a new high, but are we overbought? Let's delve into the charts:

1. ChiOsc: No divergence yet, so accumulation is still in play.

2. Bollinger Bands: We've breached the bands, which often signals a pullback.

3. Volume: Still strong.

4. ADX: Buyers are firmly in control.

Stay alert, traders—while the bulls are charging, the charts suggest caution is warranted.

Short-Term Shorting Strategy:

For quick scalp plays, consider the following scenario:

- Gap Up in the Morning: If the market opens higher and the MACD immediately shows divergence, look for a pullback.

- Target Level: A break and retest towards 5450 could offer a prime opportunity for a short trade.

Keep an eye on the early market action to capitalize on these quick moves!

Play the Fibonacci Bounce:

If you missed the sell-off scalp, there's still a great opportunity with the Fibonacci bounce. Here's how to play it:

- Fibonacci Retracement: Look for a 38.2% retracement.

- Support Level: Check if the 5462.50 support holds.

- Action: Pick up an ATM call at this level.

- Profit Target: Ride the bounce up towards the 5475 profit target.

Keep your eyes on the retracement level and be ready to enter the trade for a potential upward move!

0DTE Plays to Watch:

- Call Vertical:

- Indicator: Pay attention to the 20 SMA on the Bollinger Bands (the middle moving average).

- Setup: Watch if they are selling and look for the expansion of the bottom bands.

- Action: Initiate a Call vertical within 10 points above the bands, ensuring there are enough premiums at this level.

- Put Vertical:

- Fib Bounce: At 5462.50, instead of taking a Call, initiate a Put vertical 10 points lower.

- Setup: Capture any premiums within that lower range, with the anticipation that the 5460 zone holds.

Stay vigilant for these setups and assess the market conditions to maximize your trading opportunities!

Closing Thoughts:

As we head into the next trading session, remember to stay sharp and responsive to the market's movements. The levels we've outlined offer strategic entry points for both bullish and bearish plays. With the potential for volatility around key support and resistance levels, it's crucial to monitor indicators like the MACD, Bollinger Bands, and Fibonacci retracements closely. Stay disciplined, manage your risk, and be prepared to adjust your strategy as the market evolves. Let's capitalize on the opportunities presented and navigate the challenges with confidence. Happy trading!