Hi everyone!
After 5 consecutive green weeks SPX finally put in a red week. This red week came after I warned that we had the potential makings of a 2B top / failed breakout that should revisit 5179. We got close to 5179 (missed by 12 points) and then we had a major reversal on Friday to close the week at 5277 still closing the week around 40 points lower than the open.
Here is a view of the most recent weekly candles:
And here is the 2B top scenario I’ve been warning about the past two weeks:
Next week, that red bar will continue to be important in deciding if this is the start of a change in trend or if bulls reclaim control by closing over the red bar for the week and we go back to all-time highs.
Despite the 124pt sell off, SPX managed to recover 85pts on Friday and finish off the month of May with a bullish engulfing:
Last week I mentioned in our analysis of SPX:
“Bulls put in a failed breakdown at 5264 on Thursday so the move is long as long as above 5264. It will be weaker the 2nd time around so bulls will not want to give that level up or else we would see a retest of 5179 which is the point of control.”
You can see here that as soon as 5264 was lost, it led to a large sell off towards 5179 before it bounced hard (expected) back over 5264.
I will keep mentioning this because the risks are currently elevated: Crucial for the upcoming weeks: "Buy the Dip" (BTD) strategy remains viable as long as crucial support levels hold. However, if support crumbles, it triggers the initiation of a short trade, and this short position should be maintained until a resistance level is successfully reclaimed. This underscores the importance of adaptability. Reminder that this goes both ways and shorting the rip does not work when resistance levels are reclaimed like we saw last week. So, make sure to remove bias and focus on just the levels in your trading.
SPX Analysis:
Key Levels: 5264 & 5340
Bulls put in a failed breakdown at 5264 on Thursday so the move is long as long as above 5264. It will be weaker the 2nd time around so bulls will not want to give that level up or else we would see a retest of 5179 which is the point of control.
Bullish Trajectory: 5264 MUST HOLD for continuation of the 5264 failed breakdown to continue higher to retest the 4324 & 5341. Bulls will need to take out 5341 for continuation higher into 5394.
Bear Trajectory: A rejection at 5264 would lead to more sell side continuation to revisit the recent lows near 5200 again. The real selloff won’t start until we are convincingly below 5179 and bears have to worry about getting trapped here in this zone.
Summary:
Bulls in control above 5179 and in breakout above 5264. As long as 5264 holds the BTD routine likely continues to work. Between 5179-5264 is a battle zone (chop zone) and below 5179 is bear territory where dip buying will stop working.
IWM 0.00%↑
Potential head & shoulders here if we fall back below 199 this week. Bulls need to reclaim 210 and push higher into 216 to invalidate this bearish setup. Despite the green week last week, it’s still lower highs and lower lows for now.
QQQ 0.00%↑
Bearish engulfing on weekly unlike SPY and IWM. For now, it’s ok over the red box, however if we fall below it again, there is a 2B top risk here.
TRADE ALERTS:
For those of you not in the Discord (www.jr28trading.com) I highly encourage it as we cover a lot of the setups given here but we also alert LIVE trade ENTRIES and EXITS on Stocks, Options, Crypto & Futures.
FUTURES TRADING:
There is a current wave of futures trading with prop firms so I will start to post levels for ES instead of SPX as well as NQ but this will go out on the weekly newsletter on Sundays.
We’ve partnered with TPT (TakeProfitTrader) USE CODE JR28
Initial cost with the 40% off and NO activation fee sale: Promo code: JR28
50k account $102 When you pass, no activation fees due = total cost $102
jr28trader.com
In this discord if you are interested, we are giving guided trades for futures like this:
Last week we sent this out to our subscribers:
As you can see, we had those red dotted lines with a photo of a dead bull to show the target if bears were able to break this megaphone down. We hit Exactly 18240 before a 400pt reversal into the close.
A new updated plan for this upcoming week will follow on Sunday.
Sentiment Check
Here is the economic calendar for next week:
A separate newsletter will be sent tomorrow with the setups I am watching for next week to paid subscribers.
Have a wonderful weekend!
Wishing you a successful and profitable trading week ahead!
Best regards,
Jovan