Daily Focus – June 4, 2025

📊 What is the Market Narrative?
Today’s session on the SPY marked a significant development, as price action decisively broke out of its multi-day balance range. This resolution from consolidation is a crucial event, indicating that the market has chosen a direction. While the breakout occurred on somewhat lighter volume, which typically calls for caution, the daily candle managed to close above its 5-day simple moving average (SMA), suggesting immediate bullish control.

The key focus for the remainder of the week will be to rigorously assess the strength and conviction of this breakout. Market participants will be observing whether this move is indicative of strong institutional buying or merely a less-convincing algorithmic push. If the breakout proves to be robust, we would anticipate continued price appreciation and sustained trading above the former balance high. Conversely, if the breakout lacks follow-through and SPY falls back into the established balance range, it would signal a “failed breakout.” In such a scenario, market profile principles suggest that price would likely rotate to retest the opposite end of the previous balance range, where the critical 200-day SMA is currently resting, acting as a significant support level.

We don’t tell the market what types of setups it provides us.  Rather, we observe, orient and decide what opportunities/setups it provides, then act accordingly using our trading toolbox – Signal Bars, Tactical Longs, ORBs, Tactical Shorts.  This will ebb and flow on a day-to-day basis and week-to-week basis.  Adapting to this is of upmost importance from an identifying setups and trade management perspective.

Heading into the session, I don’t see any high-quality setup in a high-quality stock that has formed a signal candle, I think warrants being targeted via a BSLO. It’s a market better suited to a tactical approach ORBs and Intraday Swings. Often the leader of the day is the first one in it’s group/theme to power through HOD with constructive price/volume action. Little details, but they matter. Of course, vice versa for the short side.

Here is my daily process:

1. Are we in an ideal Swing Trading environment? This means leading stocks ‘calmly’ tightening along key daily MAs. If yes, look for signal bars to form, which I could target via BLSOs or ORBs Setup.
2. If no, are we short-term extended to the upside? Wait for leading stocks to pull back towards key daily MAs (especially if overbought 20-day MA breadth readings), then tactical short setups or non-correlated groups/themes like commodities are an option.
3. If no, are we short-term extended to the downside? Wait for leading stocks/themes with relative strength to reclaim key daily MAs via Wycoff Phase C Spring (especially if oversold 20/50/200 day MA breadth readings), then tactical long setups to overhead resistance (sell 7/8th LOC, swing 1/8th & possibly 5 Min ORB next day) and/or tactical shorts at key levels and Daily MAs.

🔍 Developing Setups:

• BULLS
  • The main cup has closed looking for a handle right shoulder off the 5-day SMA
  • Looking for a tight inverse H&S in the right shoulder off the green support zone.
  • Gap and continuation in white algo
• BEARS
  • Look for H&S with the left shoulder liquidity already present. Ideally, rejecting the previous local high
  • Gap down and rejection of the green zone and yellow algo
  • Looking for a deeper cup to close and reject off the 5-day SMA.
• SCALP RULES ( Two very, very simple principles)
  • Set out the trading framework for the day. So, you take trades only based on the rules you established based on the context for the day. For the morning moves, if the market is kind, it’s looking for continuation structure. Identify the control algos, and the precision algos for the breakouts.
  • NO REVERSALS UNLESS: Head and shoulders or for Cups to close and handles form. The principle behind waiting for cups closing to soak up the sellers before confirmation of going long. If unclear. Wait for break/retest.
    • An advance move is called a ZOMI (Zone of Mutual Interest). A big part of understanding ZOMI is to not call the absolute bottom/top. You want price to minimum move back into algo and to know where the liquidity is that both bears and bulls want to gravitate toward. 5day MA is often a usual suspect. If we lack continuation structure and get a stop hunt – you are prepared. Use engulfing candles as stop hunts at lows for a head of a HS formation.
    • Example below of a great ZOMI trade waiting for the handle off the magenta as resistance R:R yes? It will help you get in position for both the IHS handle and the H&S. Enter puts at green candle off magenta as stop loss target

💥 Earnings / News Movers:
Tomorrow, Wednesday, June 4, 2025, the US economic calendar presents a busy morning with several key data releases that will shape market sentiment. The day begins early at 4:00 AM PDT with the MBA 30-Year Mortgage Rate, providing an update on borrowing costs in the housing sector.

A significant release will be the ADP Employment Change for May at 5:15 AM PDT. This report, often seen as a precursor to the official Non-Farm Payrolls data, provides a private-sector estimate of monthly job creation, offering crucial insights into the health of the labor market. A stronger-than-expected ADP figure could reinforce expectations for a tight labor market, potentially influencing Federal Reserve policy.

At 7:00 AM PDT, the ISM Services PMI for May will be released. As the services sector constitutes the vast majority of the US economy, this report is highly influential, detailing business conditions, new orders, and employment trends within non-manufacturing industries. A robust reading here would underscore economic resilience.

Concurrently at 7:30 AM PDT, the Energy Information Administration (EIA) will publish its weekly Crude Oil Stocks Change and Gasoline Stocks Change. These reports are vital for energy market participants, as they offer official figures on US inventory levels, which can significantly impact crude oil and gasoline prices. Throughout the morning, Federal Reserve officials Fed Bostic (5:30 AM PDT) and Fed Cook (10:00 AM PDT) are also scheduled to speak, and their commentary will be closely scrutinized for any nuances regarding the economic outlook or monetary policy implications.

I will be looking at pre-market earnings, such as CRWD (potential GDR), in the morning to see if we have a Gap and Go or Gap and Fade play. I will take no more earning butterfly lottos or double calendar plays for Friday.

🎯 Key Groups/Themes & Leading Stocks
These are some of the main groups/themes and what I deem are current leading stocks within them I’m watching for setup opportunities to form in coming sessions.

• D-Wave Quantum Inc. (QBTS): D-Wave Quantum Inc. operates in the technology sector, specializing in quantum computing hardware and software. On its daily chart, QBTS is displaying a bull flag breakout pattern along its 10-day exponential moving average (EMA). This continuation pattern suggests that the stock is poised for further upside after a period of consolidation.
• Uber Technologies (UBER): Uber Technologies, a leader in the transportation industry within the consumer discretionary sector, provides ride-sharing and food delivery services globally. On its daily chart, UBER has executed a classic technical maneuver: it has broken out of a previous base and is now in the process of retesting that former resistance level, which is now acting as robust support. This “break and retest” often confirms the strength of the breakout and provides a higher-probability entry point for continuation.
• Vivopower International (VVPR): Vivopower International operates in the electric utility sector, focusing on battery technology, electric vehicle charging solutions, and sustainable energy infrastructure. As a momentum-driven stock, VVPR has recently pushed decisively above a significant area of overhead resistance. This strong breakout indicates renewed buying interest and a potential for further upward acceleration as it enters new price territory.
• C3.ai, Inc. (AI): C3.ai, Inc. operates in the technology sector, specializing in enterprise artificial intelligence (AI) software. On its daily chart, AI has demonstrated a clear breakout from a previous consolidation base. Similar to UBER, it is now in the process of retesting that former resistance level, which has theoretically transformed into support. This retest is a critical phase, as a successful bounce would confirm the breakout and reinforce the bullish sentiment for this AI-focused growth stock.

📊Additional things to consider tomorrow:
Analyzing the SPY market profile chart, the past several trading days have been characterized by a large, well-defined balance range, indicating a prolonged period of market equilibrium where price found acceptance. Notably, previous attempts to break out of this range (as indicated by the red line showing failed upward pushes) ultimately retraced back inside, reaffirming the boundaries of this consolidation.

However, today’s session marked a significant development: the market decisively broke out of this large balance range to the upside. Crucially, both the Value Area and the Point of Control (POC) for today’s profile ended outside the previous balance, underscoring the conviction behind this breakout. Furthermore, today’s rally successfully repaired a previous “poor high” (circled in green), suggesting that an imbalance in the auction was addressed.

Moving forward, the key will be to observe the market’s response to this breakout. Will it continue to auction higher, confirming the strength of the move? Or will it retrace to “backtest” the top of the former balance range, potentially finding support there before resuming its ascent? Alternatively, a complete rejection of this breakout, leading to price re-entering the old balance, would suggest a failed attempt and could send the market towards the opposite end of the previous range. The market’s action immediately following this breakout will dictate the short-term directional bias.

🧠 Get Your Mind Right

1. With early candles, focus on identifying the algos. Do not force the trade. More candles and chop are great. It builds a structure for a larger move. Let the range spread itself out to reveal more imbalances.
2. If you’re in any trade, protect aggressively early candles, please. Especially after large candles, protect.
3. Who cares where the charts are going? So, if you cannot find a structure that will activate the precision algos, just stay out. Let the market present itself to you where it wants to go. No structure, no trade.  If you end the day with ZERO trades. So be it. What’s the problem with that?
4. Be patient with entries. 3 quality trades a day (Not 3 trades an hour). Be patient with setups.
5. If you lose focus, take a breather or call it a day. If you missed anything, so be it. We miss trades daily. You have to get used to it. Second nature to a trader. The market is open every day. For the rest of your life.
6. You’re a Winner. Act Like it! Be disciplined. Be victorious in your rules and discipline. No silly mistakes.
7. You’re not gonna go wrong if you get a good fill (calls at support & red candles, puts at resistance & green candles) and protect aggressively. Getting a good fill is like starting the 100m race at the 50m line.
8. If we don’t see tapering into a respected horizontal channel, we are still in a larger buying/selling channel. Tapering can be messy, take time and will generally lead to a cup. Wait for handle AND the cup completions. Be patient and find the liquidity zones the sellers/buyers can grab.
9. Focus on isolating and compartmentalizing each trade setup. Use the 30min chart to find context, then identify the microstructure algos and structure for trade entry in the 1min chart. At the back of your mind, always look out for the liquidity wedge of doom (low volume, inside candles & no imbalances). Don’t force trades in the middle of the range. Do NOT overtrade a range you’ve already extracted profits from. When we lack continuation, that’s when the liquidity wedge will most likely control a big part of the action. Just set alerts and come back in power hour if there’s no new structure.
10. The rule of thumb is simple – if it’s not in the strongest algo. You don’t want it. If it’s not in the strongest selling algo, then the selling is “controlled”. by whom? The bulls to build liquidity. So, why short this until more confirmation? Such as a stronger structure or closing inverse cups.