Bassem

$SPY $QQQ Weekly Outlook 2–6 November: Is the Bottom In? Last week my bearish thesis played out: SPY reached my downside targets and much more. I closed my puts, and I’m now entirely in cash. I’m looking for the next swing trade, but I don’t believe Friday’s decline automatically marked the bottom. Why I warned against buying Friday’s dip ? September’s decline towards $747 was different. Back then, SPY was trading above its daily 100 SMA and EMA and holding its weekly 20 SMA. That gave me more confidence in buying weakness. This time, SPY closed below its daily 100 SMA and weekly 20 SMA around $757 although it remained above its daily 100 EMA. That deterioration matters. Last week I highlighted an observed warning pattern: QQQ loses its 20 week moving averages first, SPY follows later. When SPY also confirms a weekly breakdown, the risk of a more substantial correction rises. QQQ remains below its 20 week SMA around 716, and SPY has now closed below its own. This is a warning, it doesn’t tell us whether any correction reaches 10%, 15% or 20%, nor guarantee one. But it does suggest we shouldn’t assume the lows are in at all. I’m shocked by the amount of people I saw calling a bottom already. Some with very big following that I don’t understand how they even got there. The critical confirmation this week: I wouldn’t be surprised by a relief rally that takes SPY back above its weekly 20 SMA at 757 during the week. Friday’s close matters more than intraday or daily reclaims. A weekly close back above it would be constructive. But for stronger evidence of a durable bottom, I also want QQQ to reclaim and close above its own 20 week SMA around 716-717. If SPY finishes another week below its average while QQQ remains weak, the case for further downside strengthens. My two trade setups 1- $747–745: Potential long. If SPY sells off into this area, I’ll watch for buyers to defend it before considering calls. I like the potential upside relative to risk at that support. If support breaks decisively, I’ll reassess. 2- Rally first: Potential short around $771. If SPY bounces without visiting $747–745, my preferred zone for a meaningful bearish swing is around $771, provided we see rejection. That’s where I see the most attractive risk/reward. The market could turn lower before reaching it, I might take a smaller tactical trade at lower resistance, or do nothing. A sustained move above $775–776 would weaken that bearish setup. Why I’m comfortable waiting ? Over the past two weeks I’ve taken just two SPY swings: a long returning approximately 101%, and a short returning over 71%. I don’t need constant entries and exits. Less is sometimes more. My focus is on A+ setups with favourable risk/reward. Until one appears, cash is a deliberate position in options trading. Economic calendar: Mon: ISM Manufacturing PMI (10 AM). Tue: JOLTS Job Openings (10 AM), US midterm elections. Wed: ADP Employment (8:15 AM), ISM Services PMI (10 AM). Thu: Weekly Jobless Claims, Productivity and Unit Labour Costs (8:30 AM). Fri: October NFP, unemployment and hourly earnings (8:30 AM), preliminary Michigan Consumer Sentiment. The labour data, particularly Friday’s NFP, matters after the FOMC and recent inflation readings. Major earnings: Mon: Apple, Palantir. Tue: Shopify, Pfizer; AMD, Arista, Super Micro, Booking. Wed: Uber, McDonald’s; Qualcomm, Arm, AppLovin. Thu: Airbnb, Cloudflare, Affirm. Fri: Moderna. Apple is the remaining Magnificent Seven to report before Nvidia. Geopolitical risk: Iran, disruption around the Strait of Hormuz and elevated oil prices add gap risk in either direction. I won’t ignore that risk just because a technical level looks attractive. Bottom line: I’m watching $747–745 for a confirmed long setup, or $771 for a confirmed short setup if we rally first. More importantly, I want to see where both SPY and QQQ finish the week relative to their 20 week SMAs. Let’s have a great week.

$SPY $QQQ Friday Recap: I Warned About This Correction. What’s Next? After yesterday’s brutal sell off, SPY managed a modest recovery today, but I’m not impressed by the price action. I closed my calls around $739, taking a small profit on the partial long position opened yesterday near $730. Why? Because this bounce simply wasn’t convincing. At all. 1. The warning I gave weeks ago While the permabulls spent the past two or three weeks repeatedly calling for SPY 780 and fresh all time highs, I was warning about something far more important. QQQ had closed below its 20 week SMA while SPY was still holding above its own. I explained that this was a serious warning sign based on a pattern I’ve observed during previous corrections. When QQQ breaks its 20 week SMA and fails to reclaim it, SPY often follows. Once SPY also loses that weekly support, the risk of a deeper correction increases significantly. That’s exactly what happened. QQQ failed to reclaim its 20 week SMA, SPY eventually broke below its own, and the market suffered a brutal sell off. This wasn’t about predicting the exact day of the collapse. It was about recognising the warning signs before the damage became obvious. 2. Why I expect another test of $727–726 SPY spent most of today’s session struggling to reclaim its first resistance around $741. To me, this looks more like a dead cat bounce than a convincing bullish reversal. I still expect a retest of yesterday’s overnight low near $727.41, potentially next week. That area corresponds roughly to 7313 on SPX, around the July lows, an important liquidity zone from which the market previously rallied to new highs. It’s also where SPY’s 200 day EMA and SMA are clustered, around $730–726. That’s my preferred zone for another bullish swing. $718 is also an important level where the 50 weekly SMA is sitting. If $726 fails $718 will be the next major support for the bounce. 3. Why I’m not buying puts here ? Even though I expect further downside, I’m not interested in chasing shorts here. The 4 hour RSI is around 30–35, much closer to my preferred conditions for buying calls. Historically, my best swing shorts have come with the 4 hour RSI above 70, offering better risk/reward. SPY can certainly fall further without that condition, but shorting after such extreme selling isn’t attractive to me. 4. What would change my mind? I’d want SPY to reclaim and hold $741, followed by $744–745, before reconsidering whether the bottom is already in. Today’s close offered no convincing confirmation. It was actually terrible. 5. Is this becoming a bear market? I’m not convinced. Technology, semiconductors and AI-related stocks have suffered particularly severe corrections, but I still see this as a correction rather than automatically assuming a prolonged bear market. Extreme volatility spikes and heavy selling volume can sometimes signal short-term capitulation. I believe selling pressure may be approaching exhaustion, although I don’t think the final low is necessarily behind us. 6. My November outlook My preferred scenario remains a retest of $727–726, maybe even $718. $765 is my initial major target, with a possible extension towards $771. If $726 breaks decisively, the next major support is the 50 week SMA near $718. Even if we test $718 first, I still expect a meaningful recovery afterwards. But a strong relief rally doesn’t automatically mean the broader correction is over. For stronger bullish confirmation, QQQ needs to reclaim its 20 week SMA. That’s the same indicator I warned about before this decline, and I’ll continue respecting it. Bottom line: I closed my small calls position at $739 for a small profit and finished the week entirely in cash. I’m not chasing puts after the collapse, and I’m not buying calls into a weak bounce. $727–726 is my preferred buying zone, as well as $718. A convincing reclaim of $741 and $744–745 could change my outlook sooner. Enjoy your weekend✌️

$SPY Agree with him. 7313 on SPX is the same 727-726 level on SPY I talked about.

This is why the market went down today.

$SPY Market Capitulation? My Trades & What Comes Next⬇️ What an absolute bloodbath today. SPY plunged over 4%, QQQ went down more than 6%, and SMH lost over 11%. The VIX surged nearly 70%. SPY opened around $765. Even with the bearish technical structure, I don’t think anyone could reasonably have anticipated a nearly $35 collapse in a single session. Here’s how I traded it and what I’m expecting next. 1. My first long: stopped out❌ I previously warned that the election night overnight lows around $743 would likely be tested during November. Well, they were tested almost immediately! When SPY reached $744, I attempted a bullish swing, expecting that support to hold. Initially, The hourly candle was recovering above support. But once SPY lost $743 on an hourly closing basis, my hard stop triggered. Result: approximately 30% loss on the options position. No drama. The setup failed, I respected my stop and moved on. 2. The next buying zone: $730–726 Once $743 failed, my attention shifted to the next major support cluster: $730: 200 day EMA area. $727–726: 200 day SMA area. This was my preferred zone for another bullish swing. I had placed a limit order for roughly half my intended calls position around $730, planning to reassess tomorrow and potentially complete the position closer to $727–726 if support held. Here’s the funny part: I completely forgot that order was still open! SPY briefly touched $730 in after hours trading before 4:15 PM, triggering my order while I wasn’t watching. So I’m now holding approximately half my intended long position, with options expiring 4 December. The level was intentional. The timing of the fill was accidental. If SPY revisits $727–726 tomorrow and confirms support, I’ll consider completing the position. 3. My upside targets: Despite today’s brutal selling, I expect a meaningful relief rally. My initial target is a recovery near $765 as a key objective and a possible extension towards $771. I expect this recovery during November, potentially before Friday, 20 November. That’s my thesis, not a guarantee. The December expiry gives the position additional time. 4. What if $726 breaks? The next major support is around $718, near SPY’s 50 week SMA. That’s an extremely important level, and I’d expect buyers to make a serious attempt to defend it. Even if the 200 day moving averages fail and SPY tests $718 first, my broader expectation remains a recovery towards at least $765 this month. Of course, a decisive breakdown below $718 would force me to reassess. 5. Why I suspect a short term bottom is approaching ? Two things caught my attention today: The VIX spike: Extreme volatility surges can accompany panic selling and short term capitulation. The enormous selling volume: Heavy volume liquidation sessions sometimes occur near exhaustion points before substantial relief rallies. Neither is proof of a bottom. Markets can remain oversold and volatile longer than expected. But combined with SPY approaching its 200 day moving averages, I believe the risk/reward for a potential bullish reversal is becoming increasingly attractive. 6. Does this mean the correction is over? Not necessarily. There’s a major difference between a relief rally towards $765–771 and a confirmed return to the broader bullish trend. For the latter, I want to see QQQ reclaim its 20 week SMA near 711. Until that happens, I’m treating a potential rally as a recovery within a damaged technical structure, not automatically the beginning of another run to all time highs. 7. Tomorrow’s catalyst We have important US jobs data scheduled for Friday morning. Bottom line: My first long at $744 failed. I took the 30% options loss and respected my stop. I’m now partially long from the $730 support area, watching $727–726 for a potential addition. My expectation: SPY eventually recovers towards $765, potentially $771, even if we first experience another leg lower towards $718.