🔴 | WHAT WILL HAPPEN TO THE MARKET IN SEPTEMBER | What to Do Right Now | GEX Analysis

A very interesting situation is unfolding in the stock market, one that will lead to a significant impulsive movement very soon. In today's video, we will discuss the further prospects, where the price is headed and what profitable trading ideas can be implemented as a result. In the previous episode, when the SPX price was at the same level as it is now, we discussed that this is an excellent place to open certain positions. I talked about the trades I am opening myself, what profit I expect and when to close these trades. I opened a broken wing put butterfly on SPY and a slightly more aggressive strategy, a diagonal put spread on spx. As a result, these positions were very profitable right up until Thursday of last week. So congratulations to those who used these ideas. However, last Friday, the market saw a powerful upward movement linked to Jerome Powell's speech. We will talk in more detail about what he said and what it will lead to a bit later. But be that as it may, the market is now again at historical highs. In the previous video, I explained in great detail what really influences market movement. I highly recommend watching it because it contained information that will be a real revelation for 90% of you. The key takeaway from that episode, which is the secret itself, is that all market movement is built around the actions of the market maker as the main stabilizer. It is the actions of the market maker that serve as the hidden engine, not the news or stock bubbles. And this brings us to the main point. Our task is to join the market maker's actions, not go against them. But how do we catch them? We can track the market maker's actions using the Gamma Exposure profile. This metric shows where the key support and resistance levels are that they will defend. And now, looking at how the market is again at its highs, the most important question is what does the gamma profile show us? Is the market maker preparing for a powerful upward movement by holding the market? Or is this a trap before a trend break? Let's go straight to the data and decipher their next steps. The Gamma Exposure profile is available in our application. The link to it is in the description below this video. To begin, let's look at a few examples. Right now, the SPX is open here and the expiration Date selected is August 27th. First of all, I want to note that you can enter any ticker, any ETF or stock here. But when we try to determine the general direction of the market movement, we should first and foremost look precisely at the spx. Understand this very important point. The index dictates where stocks should move, not the other way around. I mean, you've probably heard the expression that the market is rising now because there's a bubble in the Magnificent seven stocks. They are overheated and this is pushing the market up. In reality, that's not the case. There is a bubble in the Magnificent seven stocks right now because the overall market needs to rise. You can observe this yourself. For example, during the day, the SPX might be rising. But if you overlay on one chart, for instance, the stocks of Nvidia, Meta, Apple, Microsoft, Google and Amazon, you will very often see a situation where, for example, Nvidia is rising and Meta is rising simultaneously with it. But at that very moment, Apple, Google and Microsoft will be falling. But then something happens and Apple, Google and Microsoft start to rise, while Nvidia and Meta start to decline. So a certain rotation occurs, but the overall movement will be upward. Therefore, internalize this idea. It's not the tail wagging the dog here. If the index needs to rise, it will rise and the market maker will find which stocks to use to push it there. Well, let's scroll down a bit. And the first thing we start our market analysis with is determining the overall context within which the day will be traded. We look at this main chart on the homepage and determine where the day opens. If the price opens within the positive gamma territory, then, meaning it is surrounded by blue columns both above and below, this will indicate that the price is in bullish territory. And this is exactly what I was talking about a couple of minutes ago and what I explained to you in great detail in the previous episode. When the market maker acts as a market stabilizer, they will buy on pullbacks from support levels and as the upward movement progresses, will take profits on their positions, and this will especially intensify near resistance levels. Our task is precisely to align ourselves with the actions of the market maker. Therefore, when the price is in positive gamma territory, the first thing we do is identify the support levels. In principle, there will only be three of them. First, it's a large absolute gamma value below the current price. To do this, we click the AG button. And if, for example, there were large absolute gamma values here, we would consider this level as support from which we could open a long position. Second, we look at the positive gamma exposure values. On Wednesday, August 27, the largest values were at the 6520 level, and this level was perceived as the strongest resistance. But if there had been another large bar below the current price, we could also have said that it is a support level from which it would be advisable. To bet on the market rising. However, since none of this was observed below the price that day, the third option remains to identify the gamma flip zone as support. I have explained many times that this is the place where gamma exposure transitions from positive to negative values. And this level will always be critically important, acting either as the strongest support or the strongest resistance. Now since this level is below the price, we perceive it as the strongest support. And here is another advantage of the gamma exposure profile. In addition to providing very clear levels, we also understand where to place our stop losses. In this example, if the price approaches the gamma flip zone, we can place our stop loss very close by. This is because if it happens that the price breaks through the gamma flip level, it will move into negative gamma territory. In other words, into bear territory. Meaning volatility could start to increase with sharper downward movements and equally sharp rebounds. But the general idea is that the situation will become destabilized. Therefore, if the gamma flip zone is indeed broken to the downside, this breakout will not be false. And with a very tight stop loss, we will get away with nothing more than a slight scare. Lets summarize. At this stage we understand that the price is generally in bullish territory. If a downward movement begins to develop, we identify key support levels from which it is advisable to open long positions. In the next step, we identify resistance levels. Here we see that the most important resistance above which the price essentially could not go that day is the 6520 level. This is where the largest positive gamma values are located and also where the largest absolute gamma values are found. Thus, we perceive this level as a key resistance and all other things being equal, if the price reaches this level, we can bet that it will not be broken. In such a situation, a bear call spread strategy would be ideal. This is because when constructing the strategy, it doesn't matter what happens to the price. The main thing is that it does not move above the resistance level and the breakeven points. I mean that whether a powerful drop occurs or the price closes very near this level, we will still earn the maximum profit of 100% by the end of the day. When the price is in negative gamma territory, the ideas are largely the same, only mirrored. I mean that if in the first case we should open positions from support levels and close positions at resistance levels, then when the price moves into negative gamma territory, it will be the opposite. We perceive resistance levels as levels from which we can attack, while support levels are seen as local zones that can halt a decline. However, there is a nuance that in conditions of high volatility, despite the negative gamma, there can be quite large bounces from the support level below. There is also such a chart which will have all the key levels we just discussed plotted on it. For example, the green line here at the 6520 mark, which corresponds to the maximum positive gamma values. The red line labeled as N1 is the largest negative gamma value. There are maximum call option volumes, maximum put option volumes, and the maximum absolute gamma value. That is, all these levels are transferred to the candlestick chart for easier visualization of where the price is relative to certain key values. But the most important thing here is the quant power line, which indicates the level that the price will tend towards. You can learn more about what this line is and how it works in the corresponding playlist. But the general idea is that it acts as a compass indicating the direction of the price movement. In other words, if the price has risen too much but the line remains below, it means we expect a price reversal and a move towards the quant power line. Just below there is another chart that shows the most important dynamic support and resistance levels. In this example, from August 27th, we can see that resistance was in the 6480 to 6490 range. Additionally, there is a page called Open interest and volume. And by looking at the spread between call and put option volumes, we see that the largest values ended at the 6490 mark. Meanwhile, if we look at the 6520 level, figuratively speaking, there's nothing interesting there. This means we already understand that although according to the gamma exposure profile, this level is the most important resistance today, it makes no sense for the price to rise there today. The main resistance now is the 6490 range, which also coincides with this chart. There is also another page called key levels. On that day, the chart here looked very narrow. But the point is that this page displays all the most important levels. In general, that day we see that many values were concentrated around the 6450 level, making it a strong support. As for higher values, we see that there were no levels above 6,490, meaning it made no sense for the price to rise higher that day. Now we transfer all these key levels to the working chart. Moving from bottom to top, we mark the largest negative gamma values with a red line. The 6450 level represents the maximum put option volumes. It also has the second most significant absolute gamma value. And the gamma flip zone is located here as well. The first, resistance level is in the 6485 to 6490 range. We can take this level from this chart in the Quant power application. And the most important strongest resistance is at the 6520 level. This is the largest positive gamma and the largest absolute gamma value. But as we figured out earlier, even though this level is a resistance, the price wouldn't rise to it that day. In the end, we see that at the very beginning of the trading session, the price tested the strongest support level, the gamma flip zone, after which it reached the resistance level, which prevented it from moving higher. What trading ideas could have been implemented that day? First, understanding that the price was in positive gamma territory, one could have opened a long position from the gamma flip level, targeting the nearest resistance level. Second, as the price approached the resistance level, realizing it wouldn't break above it, one could have bet on a downward reaction. But besides this, our application has a magical power zone button. When activated, a yellow zone appears. This is a unique development. You can learn more about how it works and what it means in the corresponding playlist. But to put it briefly, its main function boils down to two things. First, it shows a range. Second, it shows maximum values. When we talk about the range, figuratively speaking, we need to highlight the square containing the largest concentration of significant values. That day it was the 6460 to 6490 range. This means the price will tend to stay within this range for most of the time, and a breakout beyond it can be perceived as an anomaly. Meanwhile, the peak values indicate the level the price will strive to reach. That day they were at the 6480 level, which is precisely where the day closed. The main advantage of this indicator is that it provides a very powerful reference point for where the price is likely to move. The further the price deviates, the more favorable trades we can open. I mean, by looking at this chart, we understand that it makes no sense for the price to rise even to the 6500 level. But if it still gets there, we can open an iron butterfly with zero days to expiration and center it on the largest power zone values. Just to give an example, let's imagine the price is at around 6470 and the maximum power zone value is at 6450. In this case, we can construct an iron butterfly with a wing width of only 10 points. The position will be very cheap. We risk only six and a half percent of our capital, with the possibility of earning 100% if the day closes exactly at that level here for beginners, I want to emphasize a very important point when we talk about strategies of this kind. If we assume that the price will immediately move in our direction and start generating profit within one or two hours, it's better to close this position right away. I mean, if this position costs US$60 and after a few hours it brings in $150 or $200 or $300, it's better to close it. Many beginners think like this. I bought an option for $60 and now I need to hold the position until the very end because I want to make $950. You shouldn't do that. Let's briefly look at another example. From Thursday, August 28, 30 minutes after the start of the trading session, the SPX dropped to the 6470 level. At that moment, the gamma exposure profile looked like this. We can see that the gamma flip zone was at the 6470-6465 level. An upward move from this level was a priority because the largest positive gamma values were at the 6490 level. The largest absolute gamma was at the 6500 level. And if you press the power zone button, the peak value was also at the 6500 level. Visually, the power zone area predominantly fell within positive gamma territory. So after the test of the gamma flip, it was logical to expect an upward movement towards 6,500. At that moment, the price was in a perfect place to open an iron butterfly centered at the 6500 level. In the end, the day closed exactly at this level and all the indicators performed just wonderfully. I am recording this video on Friday an hour after the market opened. Let's identify all the key levels and think about where the price is headed today. The main resistance is at the 6500 level. This is the largest of the nearest positive gamma clusters and significant absolute gamma values are also present here. However, note that a negative gamma island is visible at the 6495 level. Thus, we already understand that under no circumstances will the price break above 6,500. Today, the gamma flip zone is at the 6,470 level. At the time of recording this video, this level has already been broken. Since the price after breaking through the gamma flip moved into negative gamma territory and the market sentiment on the key levels page is described as strongly bearish. We can confidently say that today is not a day for long positions given the size of the absolute Gamma at the 6450 level. This level will not be broken to the downside, but a strong bounce is not expected from it either. Because if you look at this chart, the quant power line is exactly at this level, meaning it will attract the price. If we transfer all these levels to the trading chart, they look like this. The 6500 level no longer interests us. Currently the price is approaching the 6450 support level. In addition to the absolute gamma values and the quant power line, the maximum put option volumes are also located here. The price is in bear territory and we understand that this level can halt the price decline and will likely hold it around itself. Now let's move on to discussing the overall market situation and I'll tell you what strategies can be implemented Last Friday Jerome Powell essentially admitted that the Fed was wrong about everything Once again. Let me remind you that the main reason the Fed maintained a hawkish stance in terms of monetary policy recently was their fear of the risks of re accelerating inflation due to Donald Trump's tariff policies. At the same time, I think the vast majority of reasonable people understood perfectly well that this was all nonsense, because even if there is a surge in inflation in the future, it will be momentary in scale, lasting one or maybe a maximum of two quarters. This is because the vast majority of macroeconomic indicators still signal a slowdown in the global economy. We are seeing a slowdown in consumer activity, a slowdown in business activity in both the manufacturing and non manufacturing sectors, declining consumer confidence and falling demand. And it's not for nothing that there is a saying that sometimes the best cure for high inflation is high inflation itself. When prices rise against a backdrop of falling overall demand, when sales are declining, inflation will automatically find it difficult to grow and will eventually be brought under control. Nevertheless, Jerome Powell apparently took a very long time to understand this, or simply didn't want to. But last Friday he finally said that the risks of inflation reacceleration are no longer a priority. Now the Fed is much more concerned about the state of the labor market, which has begun to show weakness, even to the point of exhibiting recessionary signs. I would like to emphasize that all these statements are made against the backdrop of official statistics showing that initial jobless claims and the unemployment rate are still near historical lows. Looking at these indicators, there is no sign of trouble here. This leads to the thought that behind the scenes the guys understand that things aren't as rosy as the official statistics show. This means there is some problem, which means it's time to start acting more aggressively. And apparently this has somewhat puzzled investors because after a powerful emotional rally last Friday, this week has been calmer. That is, we haven't seen the unrestrained joy that was observed at the time of Jerome Powell's speech. Everything here indicates that we are about to see a repetition of historical correlations. As has always been the case, the Fed starts cutting rates not when the economy needs support, but when the economy already needs to be rescued. Well, I think you all know very well that it is during this period that a powerful downward movement is most often observed. An interesting fact is that all this coincides with the autumn period. In previous episodes I have already mentioned that the market has two weakest periods. These are March to mid April and September to October. That is, if there were any reasons in the economy before why a crisis or recession could begin, they usually started during these periods. But of these two periods, autumn is considered weaker. Among other things, this is because the financial year ends here. Fund managers move to rebalancing their portfolios. And this is not exactly a factor that can cause a crash, but it can increase volatility. In this regard, if we build a forecast of where the price could go from this range, I still adhere to the point of view that I expressed in previous episodes. If we take the foreseeable medium term perspective, then from this range, the probability of seeing a downward movement is higher than seeing an upward movement of a size similar to this potential fall. The nearest target for a decline which should be tested in any case is the range of 5,800 to 6,000 points. What happens after that is still an open question. The first option is that after a correction, the market will find the strength to test the highs again. Perhaps this will happen against the backdrop of a Christmas rally, and after that we will see a more substantial decline. Option number two is that after the SPX tests the 5800-6000 range, this level will briefly act as support, but will then be immediately broken and we will see a renewal of the April lows. In any case, the key idea is that the market is now in a zone from which we are highly likely to see a reversal. But one way or another, Jerome Powell's dovish rhetoric has given us another opportunity to bet on a market decline which in terms of risk reward ratio, is now very profitable. Purely mathematically. The only nuance to consider is that now the main thing is not to make a mistake in timing and not to be greedy, because purely from a technical standpoint, there are no reversal signals yet. We are only seeing indirect signs, which, again I discussed in great detail in the previous episode. Therefore, for now, when opening positions, it is better to play it safe, move stop losses, to break even and not make a bet of a lifetime that we are opening a trade now and will sit it out until the end, hoping to make 1,000%. So what positions can be opened now? I still really like constructing a broken wing. Put butterfly on Spy. The strikes are chosen similarly to the previous episode. Only now you can select an expiration date of September 30th or even a bit later. And I want to emphasize once again that if the market decline happens very quickly, it's better to immediately move stop losses to break even on this position. This is necessary so that if there is a small upward spike in mid September, we can lock in profits and then re enter a similar position later. The appeal of this trade is that per lot it is relatively inexpensive, around $70. The breakeven point is close and no matter how much the price falls by expiration, our maximum Profit will be 770%, which is quite good. The second strategy, 1am opening now, is a diagonal put spread on SPX. The expiration dates selected are September 12th and 15th. A more extreme option would be September 5th and 8th, but the safer choice is September 12th and 15th. The idea is that this strategy looks very attractive in terms of risk reward ratio right now. For example, if you choose the nearer dates and the price is near peak values at expiration, the profit could be around 1,800%. However, it's important to note that this strategy has both advantages and disadvantages. The downside is that the expiration dates are relatively close. This isn't a medium term strategy where we give ourselves extra time for decision making. Nor is it an intraday strategy where we can rely heavily on the gamma exposure profile. The issue here is that even if we are correct and the price moves in the desired direction, the position may not always have enough time to reach maximum profit due to the near term expiration. Therefore, it requires close monitoring. That said, this downside is offset by the very high potential returns if the price moves in our favor. So I remind you, if you open this position and the price starts falling within the next couple of days, it's better to take profits immediately rather than wait for expiration. If the price falls to these levels and there is only a day or a day and a half left until expiration, then it makes sense to fight for this trade and hold it as long as possible. Because in this case, the position will start generating profit very quickly. Overall, I hope I've managed to convey the main idea. Right now, these kinds of trades look very advantageous, at least from a purely mathematical perspective and from a technical analysis perspective. This week the SPX hit a resistance level. On Thursday there was a false breakout, and at the moment it looks like the market is attempting to reverse downward. Good luck with your trading and see you next time.