SPY ETF Reaches Saturation Point-Expect Profit Taking

SPY ETF Chart 1-10-19

SPY ETF Chart 1-10-19

The stock market and specifically the SPY ETF reached a SATURATION POINT yesterday.

I thought it would be fun to give you an idea about how smart money “works order flow” so you have my roadmap for tape reading. This can take years to learn but once you have the skill, everything changes…

Saturation Points were originally developed in the 1950’s by a grain trader in Chicago. I studied the method and adapted it for today’s ever-changing markets.

Key Concepts to Understand

  • As institutions work orders, the market tends to make highs or lows every two to three days
  • A fourth or even a fifth day in one direction may occur in a strong trend (how to recognize and trade this will be explained in detail)
  • As the market alternates between buying and selling pressure our objective is to enter as this pressure “saturates” in a value area to buy, and “saturates” in a profit taking area to sell or sell short
  • Thus the theme is enter today, exit tomorrows open, or hold one day longer if the trend is very strong
  • Longer term fundamental outlook has NO bearing on the strategy.

Giving Structure to the Strategy: The “saturation process”

  • Of buying and selling pressure over a two to three day window
  • Combined with the thought process of value area and profit taking areas
  • Creates a Roadmap so day to day price action and the opening price action will never be random
  • Intraday price action can be a lot of “noise, your goal is to capture the low to high or high to low

Key Observation:

  • With this roadmap you should ALWAYS know what to expect, and you will only look for what you expect, both in the setup, open and entry
  • This gives you the power to trade confidently when the expected happens because you planned for it
  • This gives you the freedom to do nothing because when the unexpected occurs it does not fit your model of price action
  • This commitment to a structure is a key ingredient that most traders lack and is the main reason in my opinion the majority of traders are inconsistent

If you want to take this lesson deeper, watch this video == >

BBBY Bed Bath Beyond Chart 1-10-19

BBBY Bed Bath Beyond Chart 1-10-19

U.S. stock futures point to first loss in five sessions for Wall Street

U.S. stock futures fell on Thursday, suggesting a winning run for equities could come to an end as optimism over trade talks was replaced by worries about a Chinese economic slowdown and the continuing government shutdown.

Stocks rose Wednesday after U.S. and Chinese officials cited progress over three days of trade talks in Beijing, though some observers cited a lack of details or even solid developments.

Replacing that optimism though, were fresh concerns over China’s economy after data showed a sharp slowdown in
consumer and producer prices.


Bed Bath & Beyond Shares Surge After 2019 Earnings Forecast Beats Estimates

Bed Bath & Beyond Inc. (BBBY) shares are set to open at a three-month high Thursday after the home furnishing retailer posted stronger-than-expected quarterly earnings and reaffirmed guidance for its full fiscal year.

“Next year, we believe that to a greater degree, we’ll be able to leverage a lot of the investments that we’ve been making both in technology and in people to be able to enhance the profitability,” CEO Steven Temares told investors on a conference call late Wednesday. “


About the Author

Pete is a full-time trader and mentor since 2000. Author of Equity Trader 101 and the Order Flow Method. He is dedicated to help self-directed traders to bust through the six-figure level.

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