This week once again proved that the support and resistance levels are zones where institutional algorithms react. We saw the SPX reach the key level of 7,650 and retrace with precision as I mentioned in my daily note on Wednesday. That level was modeled well in advance of the price action, capturing the session highs on both Wednesday and Thursday. For the QQQ, our bullish weekly target of 689 acted as resistance zone, that level was lost on Thursday and the declined gained traction.
For that reason those levels are used to set targets after analyzing the direction of a ticker based on disciplined (non-emotional) technical analysis. A good example is the anticipated reversal for AMD for this week: the stock scaled level since Monday when 455 was recovered and the price moved to 508 and consolidating there for two days before jumping to the next one at 567.7 on Wednesday. By Thursday that level was flipped to support, and as we permanently study, when a line is conquered it flips to support from resistance for longs, or to resistance from support for shorts. Today 567.7 was lost triggering alarms, and then the monthly level of 551 was also breached; using these levels as stop loss references helps to lock profits or avoid any reversal.
We saw the levels working for SPCX, my bullish target of 144 acted as resistance to cap a 7.7% weekly move. For NVDA, the absolute bottom of the week printed at 148.8, very close to my final weekly support of 147. The examples can continue.
Why do institutional algorithms react to these levels? It all comes down to one word: liquidity. Large banks and hedge funds trade billions of dollars. They cannot just click “buy” or “sell” in the middle of nowhere, or they would crash the price against their own trades.
Instead, they program their algos to hunt for specific calculated price zones. These algorithms know that at these exact levels, thousands of regular traders have placed their buy orders, sell orders, and stop losses. When the price reaches these zones, the algorithms trigger automatically to absorb all those orders, allowing the big players to enter or exit massive positions. This is what causes those reversals you see on the charts like NVDA bouncing or SPX & AMD retracing.
How I use this at SmartReversals: I analyze direction using technical indicators and then set targets and risk management levels when I model the same boundaries where algorithms are likely to react.
Every Friday I model the support and resistance levels for the week ahead for each ticker in my watchlist:
Indices & Futures: SPX, NDX, DJI, IWM, ES=F, NQ=F
ETFs: SPY, QQQ, SMH, TLT, GLD, SLV, DIA, VXX
Major Stocks: AAPL, MSFT, GOOG, AMZN, NVDA, META, TSLA, SPCX, LLY, WMT, AVGO, COST, JPM, XOM, PLTR, NFLX, V, AMD
Crypto & Related: Bitcoin, Ethereum, ETHA, IBIT
Leveraged ETFs: TQQQ, SQQQ, UDOW, SDOW, UPRO, SPXS, URTY, SRTY
When you become a paid subscriber you can post in my premium chat the tickers of your preference that aren’t in my watchlist, I model them on Sundays and post them in the paid subscribers site, so you have the same edge for more securities.
If you are interested in learning more about S/R levels, I highly recommend reading my educational content. Chapters 3 (Identifying Setups Using Support & Resistance Levels) and 4 (High Probability Setups) provide all the information you need to navigate these zones effectively. Additionally, my daily notes track the watchlist and measure exactly which securities are trading above or below our key levels. You can access my educational library here:
Today’s Content:
The week closed in the green for the SPX, NDX, and the majority of our tickers, but many retraced from key central levels. The anticipated bullish week has passed. Moving into next week, the levels that just acted as resistance must be conquered:
Weekly Levels for each ticker on the Watchlist
Monthly Levels for each ticker on the Watchlist
Combined Levels
Daily Plan for Monday (SPX and ES=F)
Let’s begin.
WEEKLY LEVELS
These levels are modeled every Friday for you, providing the information needed to assess risk and reward before the market opens on Monday. You don’t have to wait for the opening bell to decide your plan and which securities to trade; you have here the distances to essential levels and the setups suggesting whether they will act as support or resistance well in advance, so you make informed and serene decisions ahead of Monday morning.
Good for bulls, many tickers closed the week with constructive conditions, see the column with reds and greens, those percentages indicate how much a ticker must jump to recover bullish momentum (Like SPCX that must jump 1.1% or momentum continues bearish, or TSLA that has some cushion since its price closed 1.4%ish above the Central Weekly level (CWL) for next week: