SPX SPY ES for 5/24/24
The full weekly plan and commentary should be reviewed ahead of this post and can be seen HERE.
I’ve written previously, “when you fully expect something to happen, and it doesn’t happen, you need to pay attention.” Today on SPY 0.00%↑ gets filed under that. We had been trading in a box 5305.75-5349 at the extremes since last Thursday. Asia session broke out of the box and rallied to the low 5360s which left inventory rather extended. During the European session there was an inventory correction (pullback) which backtest and held (confirmed) the breakout. Price made a higher high in the 5360s which again left overnight inventory stretched to the long side and an inventory correction was therefore expected. However, this was anything but routine. From 8:50 to 9:50 there were only two green 5-minute candles, both dojis. The opening drive (initial move at open) sold hard straight through the top of the box. There was a feeble attempt from buyers to hold the 40s before PMI was released and the selling intensified. Price ended up breakdown down through the bottom of the box during the afternoon session, tagging a critical support.
The way this played out was rather unusual for a look above and fail. It is far less common to see a breakout, back test, and a resumption higher (a higher high) that then immediately fails. Usually, a failed breakout plays out much more quickly. That said, we are always mindful to evaluate each session on its own. Asia and Europe favored the breakout, whereas the more important US cash participants rejected it.
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-For those that trade SPY/SPX, there is an ES to SPY/SPX converter in Tradingview. See announcements in the Discord.