Hi everyone!
This past week went as planned as SPX hit fresh new all-time highs after reclaiming that 5179 level earlier in the month. SPX is now officially up 30% or 1221 points from the October 2023 lows. For comparison, the rally from October 2022 lows into summer 2023 highs was 31.95% and 1115 points. For the next few weeks/months that 5179 will continue to be our guide. If we were to fall back below that level, we could see a 2B top / failed breakout forming which would lead to the unravel in price to 4700’s that everyone was looking for beforehand.
Obviously, it is way too early and above 5179 bulls are in control for now, but it’s a good idea to keep potential scenarios in mind for perspective. Remember as traders it is not our job to predict, but rather react to price accordingly. Being prepared leads to better reactions and profitable trades.
Last week I mentioned in our analysis of SPX:
“It is possible to take a chase long here as long as 5198 holds to continue higher into 5264 and fresh new ATH.”
We started the week near 5233 and then basically just went up every day into 5325.
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: 5179 & 5264
I will leave the same key levels as last week as they are still valid for the current breakout. There is a breakaway gap at 5250 that bulls will want to defend to continue this push higher.
Bullish Trajectory: Ideally a failed breakdown of 5264 would be a decent relong to continue higher into 5335, 5394 and 5420. Bulls must defend the breakaway gap at 5250 or else we could retest 5198 and that would be the 2nd spot for a potential failed breakdown long. We could theoretically sell off all the way back to 5179 and no real harm is done to the bullish structure as long as it held there.
Bear Trajectory: A breakout is being attempted by the bulls. The only bear scenario would be a failed breakout, which would need to see a sell under 5160-5179 to trigger a large sell leg. Under 5160 would trigger a sell leg into 5072. You could get a short scalp out of the breakaway gap at 5250 being filled which would likely take us to 5198 for a retest.
Summary:
Bulls in control above 5179 and in breakout above 5198. As long as 5198 holds the BTD routine likely continues to work. We are currently in a breakaway gap similar to the ones we saw early in the year which led to constant continuation higher so keep that in mind while that gap is open. Only bear case is below 5179 which would turn this into a large, failed breakout.
IWM 0.00%↑
Moment of truth here for $IWM, above 199.88 is good but not out of the woods for bulls as you can see a potential H&S here if we sell off next week.
Bulls need to push next week higher into 210+ area to invalidate the potential bearish setup.
QQQ 0.00%↑
QQQ is bullish above 436. Above 436 is 441 and above 441 is 447 and ATH around the corner.
No bear case here unless it goes back below 436. Gap below at 427.81 would act as support the first time around in the event we do sell below 436 next week.
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.
Some sample alerts in the past week:
BABA $85C JUN 21 from 1.47 to 6.90 (+369%)
AAPL $190C JUN 21 from 2.04 to 5+ (+145%)
GOOGL $175C JUN 21 from 2.03 to 5+ (145%)
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.
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In this discord if you are interested, we are giving guided trades for futures like this:
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