Midweek Recap, Outlook, and Trading Plan
Recap
The past week saw multiple failed breakdowns in the S&P futures market, with each day since last Wednesday offering actionable trading opportunities. Yesterday's traditional failed breakdown, following a significant low and substantial sell-off, resulted in a rally to 4335. However, the subsequent sell-off highlights the importance of level to level profit taking. The same setup triggered again at the close yesterday, offering two fine entry points before invalidation.
Key Structures
The large, multi-month triangle which commenced the sell-off on September 20th remains a key feature. The downtrend line connecting the June 26th low with the August 18th low is a major victory for bulls. The most important level/pivot is 4336, which connects the August 2022, Feb 2023, and June 2023 highs. The core bull market uptrend line, shown in red, is now a “must hold” to keep any further relief rally in play.
Support Levels
4254-58, 4227-30, 4206, 4190, 4165, 4127, 4111, 4087-91, 4075.
Resistance Levels
4290, 4308-04, 4336, 4350-55, 4380, 4400, 4418-24, 4448, 4472, 4496-4500.
Trading Plan
The bull case tomorrow hinges on the trendline at 4308 reclaiming, which should set the seasonal bottom. If ES defends 4230 on any further selling and heads back to 4290, 4308, this could signal the bottom. For a more direct bull case from the 4254-58 level, a test of 4254 in the morning followed by a spike back into the high 4250s could indicate a move up to the 4290, 4308 backtest.
The bear case, which remains the default, would involve ES continuing lower to 4227-30, ideally with overnight relief bounces not exceeding 4280. For those looking to add on shorts, the key is not to chase. The best shorts are on bounces, and a fail of 4254 tomorrow morning could trigger a move down.
Wrap Up
After today's big move, predicting the market's next move is challenging. The focus should be on reacting as per the plan. Bears could potentially defend 4269, 4280 max overnight and see another leg down into 4241, 4230-27 before a bounce. However, traders should be mindful of short squeeze risk.
Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decision
The past week saw multiple failed breakdowns in the S&P futures market, with each day since last Wednesday offering actionable trading opportunities. Yesterday's traditional failed breakdown, following a significant low and substantial sell-off, resulted in a rally to 4335. However, the subsequent sell-off highlights the importance of level to level profit taking. The same setup triggered again at the close yesterday, offering two fine entry points before invalidation.
Key Structures
The large, multi-month triangle which commenced the sell-off on September 20th remains a key feature. The downtrend line connecting the June 26th low with the August 18th low is a major victory for bulls. The most important level/pivot is 4336, which connects the August 2022, Feb 2023, and June 2023 highs. The core bull market uptrend line, shown in red, is now a “must hold” to keep any further relief rally in play.
Support Levels
4254-58, 4227-30, 4206, 4190, 4165, 4127, 4111, 4087-91, 4075.
Resistance Levels
4290, 4308-04, 4336, 4350-55, 4380, 4400, 4418-24, 4448, 4472, 4496-4500.
Trading Plan
The bull case tomorrow hinges on the trendline at 4308 reclaiming, which should set the seasonal bottom. If ES defends 4230 on any further selling and heads back to 4290, 4308, this could signal the bottom. For a more direct bull case from the 4254-58 level, a test of 4254 in the morning followed by a spike back into the high 4250s could indicate a move up to the 4290, 4308 backtest.
The bear case, which remains the default, would involve ES continuing lower to 4227-30, ideally with overnight relief bounces not exceeding 4280. For those looking to add on shorts, the key is not to chase. The best shorts are on bounces, and a fail of 4254 tomorrow morning could trigger a move down.
Wrap Up
After today's big move, predicting the market's next move is challenging. The focus should be on reacting as per the plan. Bears could potentially defend 4269, 4280 max overnight and see another leg down into 4241, 4230-27 before a bounce. However, traders should be mindful of short squeeze risk.
Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decision
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