Week of March 18th, 2024
SPX rising wedge cracks, FOMC ahead
Hi everyone!
This past week we put in the 2nd consecutive red week for the first time since October 2023. This past week was also a small red candle (inside bar) and a crack of the rising wedge.
Typically for a breakdown out of a pattern like this we would want to see a large red bar to show conviction in the move, however with FOMC next week, it would make sense that we would hang out around this area until then. We should expect to see increasing volatility in the coming weeks. If we do put in a large red bar next week, we are likely headed towards 4818.
Last week I mentioned in our analysis of SPX:
“Bulls are in control above 5110 and can stage a failed breakdown (reversal of the bearish engulfing) while above this level. If 5150 is reclaimed, we can retest the recent highs around 5180-5200.”
We started the week at 5110 and as mentioned a dip / failed breakdown would be a solid long entry for a retest of the highs at 5180-5200. We got that entry near 5091 and from there it was only up straight into our 5180 target which was fully met before a full roundtrip back.
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. For those accustomed to habitually buying every dip, swift pivoting is essential when support levels start to erode. Failing to do so might result in surrendering hard-earned gains by persistently attempting to buy dips amidst a multi-day, multi-support downturn.
The red lines drawn above are the important zones to watch for the upcoming week. Bulls are in control above them, bears take control if price starts to trade below them. By take control - I mean the trend goes from buy the dips (bull) to short the rips (bear).
SPX Analysis:
Key Levels: 5056 & 5110
Bullish Trajectory: This 5110 level is now well tested and has held several times so it is time to proceed with caution if buying dips here again. A failed breakdown of 5056 would be a better entry if seen. However as long as 5110 keeps holding, bulls hold the control and can take us back again to retest 5180 area. if 5180 is taken out we could see a breakout to 5220.
Bear Trajectory: A break of 5110 turns into a failed breakout which can lead to a retest of 5056. If 5056 falls, then we start a sell leg to fill the gap at 4983 and head into 4800’s.
Summary:
BTD continues to be in play as long as above 5110. A fail of 5110 is the first warning to bulls that this rising wedge is about to break down.
IWM 0.00%↑
We got our 209 test on IWM and then put in a doji on the weekly. This 200 level will continue to be key for us in the coming weeks. As long as 200 is supported on dips we should continue up into 216.83. If 200 falls - this turns into a failed breakout and 2b top and I would not want to be long below 200 here.
QQQ 0.00%↑
QQQ remains in active breakout with 408 continuing to be the pivot spot of control. Above 408 there is plenty of upside room into 472 (measured move).
427 level will be our guide. Above it we likely continue into 449.84 and above that is the full move into 472.21. No selling until 427 falls.
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 the subscriber only newsletter:
We covered amazing setups and gave clear LONG or SHORT recommendations on each ticker.
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