Market Analysis and Trades for 5/23
Is it Over?
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The weekly post and video for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to Market Analysis for The Week Ahead
Yesterday afternoon I outlined the case for consolidation today forming a lower distribution on the weekly volume profile. From the plan lasty night and a few hours before in the Discord:
We can see that we did just that today. The weekly volume profile after today:
As can be seen from the commentary excerpt, this doesn’t have to be bearish. However, if we do end up seeing a downside move, it is perhaps more sustainable if we have built time and volume on the way down as opposed to a straight liquidation.
We expected two-way trading in yesterday’s range and therefore had both long and short setups.
The look below and fail of yesterday’s low, holding 5841-5844 played out twice (this is an RTH only chart). Low of day was 5842.75 on a cash hours basis.
The short setup paid for those so inclined as well:
We saw a look above and fail of 76-79 in the 2nd 30 minutes of the day, and later a rejection of the 5884.5-5890 level which triggered a look above and fail of the IB high (the safest way to play it).
The second arrow, back within the IB was the safer short as opposed to shorting 84.5 directly. Though I was at a school even for the kids, we did have a little fun with the second one as well as I often set alerts for the IB high and IB low when I’m off the desk (solid practice imo).
We had identified a large buyer in the 53-55 area so it was wise to be on runners by this point. That indeed ended up producing a higher low and held again into the close
It actually did play out a second time late in the day as well.
Tomorrow will be a key close for the week and will determine my lean for the next 100 handles. As of now sellers have a setup to fill the gap if they don’t drop the ball tomorrow. In tonight’s plan we will outline what a bearish setup would look like tomorrow and into next week, and on the flip side where and how we will press longs should the sellers fail. I don’t need to know which direction we will go as of now, we can simply react and roll with the winner as either direction likely produces a 100 handle move.
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