Market Analysis for The Week Ahead
5/25-5/30. No Paywall this Week. Enjoy!
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No recap, no paywall. Enjoy
ES Levels/Ranges:
See last week for higher levels if needed
6039-6048*
6024-6028
6004
5990-5995*
5974.5-5977.5
5956-5959
5947-5950.5*
5935
5907.5-5912.25*
5887-5895 5/22 high. Monitor for a LAAF especially with 5907.5-5912.25 above
5841-5851* A wide range but a critical weekly pivot. Caution a failed reclaim/LAAF.
5822-5825
5791-5793
5780.5 This past week’s RTH low and the bottom of the 2-week balance.
5769-5775
5756.5 the Friday premarket low, YTD VWAP and August low AVWAP
5733.5-5741* This would fill the bull gap and represent a back test of the prior 7-day balance. It probably needs to hold
5720-5725 potential trap below 5733.5-5741.
5705-5711
5678-5684
5653-5663*
5615-5622
5596-5601* bottom of 7 day balance
NQ Levels/Ranges:
22030-22080*
21942-21969*
21854.25-21888*
21740-21760
21646-21667*
21520-21558.5* Widened slightly to capture this week’s RTH high
21440-21451
21320-21340*
21243-21257
21187 keep
21115.25-21131.75*
21069-21083* widened to capture Friday’s RTH high. Monitor for LAAF
20994-21006
20935
20882
20690-20727* 5/11 week’s RTH low to 5/18 week ETH low. Bull gap below. Monitor for LBAF
20586-20605
20521-20537
20439-20460.5
20391-20407
20376.75 5/11 week’s RTH low
20317-20337.25* Includes 5/4 week high and RTH gap fill. YTD VWAP sits here
20254-20262.5
20185.5-20205
20136-20143
20084
19980-20020*
COMMENTARY:
ES finally found a short term high and entered at least a shorter timeframe downtrend. Please refer to last week’s plan for the potential paths we drew out for ES on this chart:
At this point any of the potential paths could still be valid outside of the first which was continued consolidation above 5837ish (41-44). Late Friday this spot was rejected from below (5843.75 high). It doesn’t mean it can’t reclaim directly from here, but we certainly didn’t hold above it all week. Therefore, aside from reclaiming directly, we could dip further into the bull gap on an RTH basis (perhaps a retest of the Friday premarket low) or come all the way down to the top of the prior 7-day box. If that box holds then we can take longs targeting 5837ish and monitor for a reclaim of what will be 5841-5851 for this week. If we get trapped back inside that box (anything aside from a quick dip into it) then we have real potential to see the bottom of that range. We could then hold the bottom of the range, get a LBAF, or of course sell straight through it. These were the paths from last week’s plan.
Here is our old SPX chart from weeks ago (before the sell in April). What is important is to note that we have thus far held the January low and the late March high. Because of the contract decay cycle, ES closed right about at the January low but below the late March high.
Seeing this on SPX is suggestive that Friday’s RTH low on ES (5780.5) is super critical. This also makes sense from a market structure/market profile perspective as it is the bottom of a 2-week technical balance (the range of the last 2 weeks).
Here is a view of that chart with weekly candles:
We also held YTD VWAP (orange) and the August low AVWAP (purple) on ES at the overnight low, and we closed at the 200sma for ES (yellow). Note the rising 21 ema (red) which has not yet crossed the 200sma.
We held the 200sma at today’s low on SPX
That upper box was from further left. We could easily (and will) just box the last 2-weeks range. We would therefore have 2 boxes sitting right on top of each other with a box within the lower box. I’ll grab a fresh chart to illustrate.
This just means things can be a bit tricky but these are all very familiar ranges and align with the paths from last week.
Regarding the 21 ema and 200 sma: You’ll recall we talked about this perhaps as far back as March, but during 2022 we saw price cross the 200sma multiple times but the 21 ema itself never crossed the 200sma until after the bottom was in. During that rally off the bottom, we did have a failed reclaim of the 200sma (red arrow) but then made a higher low (green) which led to the 21ema crossing the 200sma (white). So even IF we see a pullback here and the 21ema doesn’t cross the 200sma we can afford a higher low to try again (as we’ve discussed for a couple of weeks).
We are in a shorter time frame downtrend, potentially seeking a daily higher low. As mentioned a couple of weeks ago, we don’t even have a proper daily higher low (in my book) until the April 21st low. Therefore, any upside daily reversal above there is a potential higher low. If we get a deep pullback from here, that can certainly complicate things as that “potential” higher low wouldn’t confirm until we’ve made a higher high. Again, just for big picture purposes, we could end up with a big question mark on something like the following (the potential higher low could theoretically be anywhere):
Price in terms of the Profile:
We did see a multi-distribution week to the downside on ES this week which effectively filled in and around last week’s profile. It doesn’t need to be horribly bearish as it is just a 2-week technical balance as mentioned above. It does, however, suggest that sellers have control in the short term. For control of the intermediate term, the break of this 2-week range (with continuation) is what matters the most. It is very much worth noting that NQ did NOT take out last week’s low nor has it come close to the 200sma yet. As it has for the last few days, this complicates matters just a bit. This is a 24 hour RTH chart but even the ETH low this week (727) didn’t take out the cash hours low from last week (690).
I’ll offer one more way to look at the big picture. The month of May is green. The April ETH high was 5773.25 and the RTH high was 5739.25. This ALSO aligns with our key spots from volume profile:
The month effectively completed a morning star reversal off that wild long legged doji (can we not call it a hammer?) but the month hasn’t closed. We could hold here and then close the month at the highs and that would look insanely bullish, or we could easily close the month near the open leaving a nasty upper wick and a LAAF month to head into June.
As seen on SPX, which is even more clean, the failure off the March open (but quite a bit further above the March high relative to ES which is a function of ES contract decay):
Again, look where QQQ sits relative to SPX. It stalled at the January close and now sits just below the March open:
Trading Lower:
If we break this ES 2-week range to the downside (with continuation), then we most likely get the back test of the 7-day balance and huge high time frame 5733.5 spot (5733.5-5741 and arguably down to 5720-5725 for this week). We would have 10 (or more if we don’t break on Tuesday) days of inventory dumping on top of 7 days of prior inventory. This would be a solid test of the strength of bulls. Note I’m using the cash hours lows (as always) for the last 2 weeks, but it is entirely possible that we get a LBAF of 5780.5 that either does or does not take out the Friday premarket low. We must respect the bull gap until it is offered from below (turned into resistance).
Any kind of upside reversal off the prior 7-day range has to be considered as a long (even a swing long) given the strength of the recent intermediate trend. I would at least be hedging any swing shorts, and I tentatively plan to personally at least be net long (holding some shorts while trying an overweight long) on such a setup until proven wrong. It is easy enough to stop out on those longs when proven wrong and hold the shorts. I would similarly trail out of remaining short runners on constructive upside action.
If we find price trapped below 5733.5-5741 then we have potential for seeing the bottom of that range (5596-5601 is the very bottom but 5615-5622 is effectively the bottom). I would be mindful of both 5720-5725 (remember the OG yearly level is 5724-5733.5) and 5705-5711 (this is a potential trap spot) as they could trigger a reclaim of 5733.5-5741. Perhaps something like this as an example:
Keep in mind from the year ahead video that (big picture) a loss of 5832-5848 (this was originally 5811-5848 and we tightened it, but we are now sitting right at 5811) opens a test of 5724-5733.5
Similarly, a hold of 5724-5733.5 opens a retest of 5832-5848. As we have seen (and has been reiterated) on both sides this year, because these are ultra-high time frame spots, price can FAFO on both sides for even a couple of days before making a decision
Trading Higher Within This Week’s Range:
I will be using 5841-5851 as the early “pivot” for next week. Any failure to reclaim this range is technically bearish consolidation and favors lower prices (perhaps the box back test or another dip into the bull gap). One can consider swinging short during an active downtrend below 5841 or after a LAAF of Friday’s high. I still think even a swing short needs to be prepared to flip long or at least hedge with longs if/once we proceed lower. Swing shorts are best reserved for clear downtrends. We had puts from pretty much the very top (and the degen 1dte from Thursday if you held the runners) and took a bunch of profit on Friday which is the responsible thing to do until there is confirmation of this short-term trend turning into an intermediate term trend.
Above 5841-5851 (cautious of a failed reclaim in the 5857-5862 range which I’ll have as a daily level for Tuesday) starts to look quite good for bulls after a hold of the 200sma. I would expect to see at least 5875 (will be used as a daily level) and a test of the current structural lower high at 5887-5895. Friday’s high was a potential lower high, but as of now (until there is a lower low) the Thursday high of 5895 is relevant structure. I want to be very careful trying to fade (by shorting) a potential daily higher low off the 200sma on SPX. We can expect 2-way trading within last week’s range but above 5841-5851 I will require sellers to prove themselves before I join them in any meaningful way. After an outside week it is entirely possible we see an inside week (especially given a short week) with a decision the following week, but I have to objectively lean with bulls in that scenario while we remain above the bull gap and certainly if we are above 5841-5851. Keep in mind the ulta-high time frame levels. Above 5848 opens a retest of 5917-5935.
Where is our next major weekly spot? 5907.5-5912.25 which is effectively right at that next spot from the yearly levels. Based on this week’s profile it is certainly possible that we get a LAAF of 5895 (perhaps from 5907-5912.25) and end up with a retest of 5841-5851. A hold of 5841-5851 following this would be a fair swing long attempt as it would represent a shift in short term structure back in alignment with the active trend. VIX would likely be reasonably low in this case and thus I may consider swinging calls.
If we do not hold 5841-5851 and we end up with, perhaps, a bearish inside week then things get interesting into June.
Above 5907.5-5912.25 I expect to see 5926.75 (will be a daily level), 5935, 5947-5950.5, and most likely 5956-5959. Frankly above 5907.5-5912.25 likely means an ultimate (perhaps not next week) test of the 2-week balance high and likely new highs.
I think that covers it for now. I’m sure I’ll post a bit more in the Discord over the weekend and of course we will have the daily plans as we see how things progress and trade it real time.
Last thing. Review the starter kit material if you haven’t. It is available both in the Discord and on Substack. You’re really missing out it you haven’t reviewed it and it will answer a lot of questions you may have.