Market Playbook

Alright, last week have been exhausting for me. Primarily for the US Presidential Election, I was glued to the Television most of the time. I rarely watch TV during regular times, but being a deeply political person has its disadvantages. Anyways, I won't talk about politics, I never did, so we will keep it that way. So with the election being over, and with the results known, I can prepare my trading playbook for the next few days.

Above is a simple daily chart of the S&P 500, the only index I trade 90% of the time. When I talk about playbook, I am just looking at the chart at multiple scales, and identifying levels. Not exactly trading, just being prepared with the position with bunch of if-else statements. Here knowing or quoting exact numbers are not critical, just approximate rounding is what we are after.

That chart above shows an undecided market with near-trend daily trend almost flat. This can be said from the near horizontal 50 EMA, the majenta line. This is expected getting into the election. Market is currently at about 3500, with all time high at 3600 (near term resistance) and near term support at about 3200 or so. So for short term trading there is potential for 100 point to the upside and 300 point to the downside. Obviously if the range holds. If the range breaks, and if it is a proper break, likely trade will be towards the direction of the break. I expect volatility to continue in the near term as more political news will hit the news wire in coming days/weeks.

The hourly chart above of the same index. shows the same two levels, but at a different scale. Critical thing to note here that there is a firm uptrend in place. Since I mostly like to stay with the trend, my intermediate term bias should be towards the long side. With of course a caveat that a solid level to watch overhead, and market is not too far from it.

The 15-min chart got busy in this display, sorry about that. I don't like to put this many line on the chart for real trading, it clouds the price action. But for this playbook stuff, I think it could be necessary. I see flat VWAP and EMA. So it has no bias at this point, until the market opens in a few hours. So, whichever direction it breaks, that will be the preferred direction to trade. Any rally that happens, people most likely will try to fade, until the breakout above 3600.

I will take the coming week slow. Also I will try to catch up on reading and stay away from TV as much as I can.

Disclaimer: This is NOT professional advice, this is all just my own opinion and experience. I am NOT a Certified Financial Adviser. Consult professionals for any financial, accounting or legal related questions you have.

Charts are created in Tradingview.com, which is a free service.