In 2021, Follow the Tape Dear Savio, What a year it has been! Did anyone see this year coming? No. But did anybody know the market was going to take a big hit in February and March? Yes! I spotted the big institutions that buy and sell in the Dark Pool getting heavier in November and December 2019. The Dark Pool prints on the SPDR S&P 500 Trust (SPY) always tell us when a big move is coming. The big institutions love to sell, pushing the SPY up higher in order to sell more before they drop it. This is a pattern I have seen for the last 26 years. Let me show you what that looks like… 
Wall Street’s biggest players sold once more at the end of January, before the big drop. You can see on January 17 and January 21 that the levels were 13 million and 14 million, which was much higher than the rest of the month. 
For a further explanation of how these prints work, see The Dark Pool Trading Primer I sent you when you signed up. Below is a daily chart of the SPY where I have shown you where all the Dark Pool “Sell” prints got heavy. That was way before we knew that virus was coming here… but the tape never lies. 
Last week here, we took a look at the recent Dark Pool prints, and I gave you some levels to watch for. So far, we have stayed above those levels for the SPY, the iShares Russell 2000 ETF (IWM), and the Invesco QQQ Trust (QQQ), the Nasdaq 100 ETF. That’s bullish. However, if we go below those levels, we will turn bearish. No thinking! Just watch the tape. SLV Debit Call Spread Last Thursday, December 17, we started up a new trade on silver via a debit call spread on the iShares Silver Trust (SLV). I just love this setup right now. Let me show you why. Over the last 13 years, the SLV has rallied from the middle of December until the end of February. You can see that from the chart below. 
I love when seasonality and patterns come together. In the weekly chart for SLV below, check out the amazing bull flag. You can see it is breaking above the top of the flag. If we measure from the bottom of the flagpole ($17) until the bottom of the flag ($22), that is approximately $5. To get the bullish target for a bull flag, you measure that same distance of $5 to the breakout point above the flag ($23), which should take this up to around $28. It is not an exact science, but we get pretty close. Here’s that chart… 
This is why I recommended the call debit spread for March 19, buying to open $27.50 calls and selling to open the $30 calls. But if you want to get ambitious, there are so many other ways you can trade silver. You can buy the stock, you can buy straight-out calls, or you can buy the real thing. Then, there’s the best part of this trade: the Dark Pool prints. We had the biggest Dark Pool prints I have ever seen on SLV at $21.42. As long as it stays above that, I will remain bullish. GLD Debit Call Spread Last Thursday was a busy day for us. Besides opening up that silver trade, we also closed out the SPDR Gold Trust (GLD) Debit Call Spread we started up on December 1, because it hit our maximum target. Our total return on that trade was 104%! When we trade spreads, we are limited to a maximum profit. But I love them anyway because they do not decay as fast as straight one-legged calls. I would love to get into a new position on gold, so I’ll be on the lookout for a trade to make this week. Watch for that. AAPL Debit Call Spread and GM Debit Put Spread Also on Thursday, we took 62% profits on the first half of the Apple Inc. (AAPL) Debit Call Spread we initiated on December 1. This morning, we closed out the second half of that trade for a profit. At the same time, we also took some profits on the first half of our General Motors Co. (GM) Debit Put Spread. If GM keeps heading south, we’ll take some our profits on the second half soon. Keep an eye out for that alert. The Year Ahead I know many analysts are trying to figure out what 2021 will be like and how to trade it. While that can be fun, I say: “Don’t bother.” If there’s anything I can teach you here, it’s to just follow the tape. No thinking! That’s why I will not make any predictions for the next year. You’re not going to find a forecast here. Instead, I will recommend trades based on the recent Dark Pool activity. Finally, I realized this past week that I have not taken off a single day this year. I am very blessed and fortunate to have my job making trade recommendations, but I need to reboot myself. So, I have decided to take off from December 24 until January 4. While I’ll stay on top of our open trades and may sneak in a few new trades between now and then, I am taking a break from this Dark Pool Trader Weekly Review for a couple of Mondays. Until next year… Happy trading,
Stefanie Kammerman,
Editor, Dark Pool Trader
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