Market Analysis for The Week Ahead
5/4-5/9
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After the trap on 4/21, the market has rallied 9 days straight. The brief liquidation (which was aggressively bought) on 4/30 was enormously helpful to get this leg higher some additional lift. We now have arrived at an extremely critical test.
Notice how relevant this range has been both from above and below, particularly on SPX. I believe this area will be the most important area to monitor possibly this entire year. The range outlined is the 4-day balance into election day, and we can see the 200-day sma sitting within the range. From a technical perspective, holding above this range brings a new all-time high into play. I have perhaps two area above that could maybe be strong enough to trigger a loss of this range, but generally holding above 5783 SPX opens a retest of the high. A failed reclaim likely brings 5400-5500 in play in the short term which is well above the current structural higher low. In my opinion bulls should welcome this opportunity to cool off some indicators
QQQ sits effectively in the same spot but has entered the range and partially tested its 200 sma.
This area corresponds to critical areas on ES from our year ahead plan. Because of the nature of the volume profiles of the last 2 weeks, bulls have some level of protection and as mentioned above, can certainly afford a higher low.
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