SPX SPY ES for 6/3/24
The full weekly plan and commentary should be reviewed ahead of this post and can be seen HERE.
Friday was a pretty wild day. It really was mostly technical, but there were certainly some tricky spots and awkward divergences as well. I had posted the below picture in the free section Thursday night:
My favored bear trap scenario heading into Friday was a look below and fail of 5240 (“failed escape” in this instance). It is a major volume profile spot and we had the bottom of the megaphone and a key AVWAP to potentially trigger the move. This played out perfectly during premarket. However, the bottom of the box remained strongly offered, for which we were prepared.
From there we were prepared to expect difficult trading if we opened between 5240 and 5270. We opened at 5257.75, retested and failed the box again, and from there 5253 had to hold a back test or it was likely to get ugly. Notice the escalation in selling once 5253 was lost. As 5240 was now very well tested it didn’t hold and there was no reason to look for longs until we got our major short target of 5213 where we knew to cover most of our short positions. Sellers got a few extra handles to 5205.5 where a very clean reversal took place, reclaiming and bidding 5213 and there was a short cover rally. Notice the reclaim of the megaphone, the weak attempt by sellers to defend 5240, and the explosive move higher following the 5240 reclaim.
The commentary for Friday and the chart:
For Monday the major question is whether or not Friday’s late move is sustained, as mentioned in the weekly plan. Below we’ll cover where it is appropriate to BTFD and where some caution is warranted.
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Levels: Reminder, I use a lot of levels, but these aren’t intended to be traded “level to level,” Depending on what the “active sequence” is for a given trade will determine which levels are most relevant at a given time and that is reflected in the trade setups. Trims of existing positions can be considered depending on the action at each level.
See weekly levels for higher
5368.25 ATH (ETH)
5358.25 RTH ATH
5346.25-49
5331.25-33.75 Last week’s RTH high and 5/19 week VPOC
5323.5 (5322-24)
5316
5307 (5305.75-5307.75)
5296.75-5299.5 Weekly level to Friday’s RTH high
5283.5
5278
5270.25 (could just use prior 72.5 level as the entire 70-74 range could be relevant)
5264
5257.25 A major prior balance high, Friday VAH, Thurs VAL
5252.75 (53) Thursday’s spike
5238-5240
5226.75
5218
5205.5 Friday’s low
5200
COMMENTARY
Not a whole lot is needed on top of the weekly post here. I’ll plan to be long, or waiting for longs, until sellers prove Friday’s late day move invalidated. I do want to be a bit selective and patient for longs after such a large and rapid move higher. Some healthy consolidation would be welcomed before continuation higher if that is the direction we are to take.
TRADE SETUPS:
LONGS:
I would love a direct test of the low 70s which I would long if it holds. As mentioned in the weekly plan, really anywhere in the 70s can hold and bid so I’ll monitor for a reaction anywhere in that range, but I would prefer a proper test of 70.25-72.5. This is an A/A+ setup and is a swing long. As a swing it will ultimately need to reclaim and bid 5307 and find traction higher.
A look below and fail of 70 (64 mentioned in the weekly plan as the most likely spot to hold) is effectively the same as the above. This is one instance in which I may actually prefer the hold of 70 as opposed to a look below and fail. If buyers are serious and the prior 70s sellers are properly trapped, then buyers will press hard to keep it that way. But this is still and A/A- setup and fair to swing.
Any kind of gap up and go above Friday’s high is clearly a long. I’m a little less interested in chasing as always but higher highs and higher lows above 5307 is a continuation long that should see nATH relatively quickly.
SHORTS:
We failed 5307 after the bell. If we fail to get traction above the 5305.75-5307.75 prior internal box low then we could get the 5270s retest. It is entirely possible that we consolidate/chop 5280-5307 but it is worth a short being short a failure in this range for a potential trip down to the 70s test. B rated setup.
If we do see direct selling that finds us below 5270 then I’m going to be tentatively bearish but it will be hard to chase shorts down 30+ handles. As long as the look below and fail doesn’t play out, however, and we remain trapped below 5270-5272.5, shorts are valid. I’ll rate it a C+/B- since it would be such a large move but if the new month and week participants are aggressively selling then we can ride with them.