Daily Focus – June 3, 2025

📊 What is the Market Narrative?
Today’s session saw the SPDR S&P 500 ETF Trust (SPY) continuing its consolidation within its established multi-day balance range, as clearly depicted on the daily chart. This sustained period of price acceptance indicates that the market is currently in a state of equilibrium, diligently building energy for its next significant move.

A notable technical development reinforcing the bullish bias is the recent “golden cross,” where the 20-day simple moving average (SMA) has decisively crossed above the 200-day SMA. This is a significant long-term bullish signal, suggesting strengthening underlying momentum. Concurrently, the 5-day SMA is flattening out, indicating a short-term pause in the sharp upward movement but not a reversal.

The price action over the last four candles is particularly encouraging for bulls, showing clear signs of bullish accumulation directly on top of the 5-day SMA. This suggests buyers are actively defending this level and absorbing supply, potentially positioning for an upward breakout from the current balance. Therefore, maintaining patience and adhering to market profile balance rules remains paramount. It is crucial to avoid “foolishly being liquidity” by trading blindly into this consolidation. Instead, observing how the market eventually resolves from this balance will be key to identifying the direction of the next sustained move.

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
  • If a deeper structure off the 20-day SMA and a handle right shoulder off the 5-day SMA
  • Looking for a nested H&S in the right shoulder off the 5-day SMA.
  • Gap and continuation in white algo
• BEARS
  • Look for H&S with the left shoulder liquidity already present. Ideally, rejecting the 5-SMA and further bear structure off the 20-Day SMA.
  • Looking for a deeper cup to close and reject off the 200-Day or 20-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, Tuesday, June 3, 2025, the US economic calendar offers a comprehensive look into the labor market, manufacturing sector, and energy inventories. The morning will be particularly active, starting with the Redbook YoY sales data at 5:55 AM PDT, providing an early glimpse into retail trends.

At 7:00 AM PDT, highly anticipated labor market data will be released with the JOLTS Job Openings for April, alongside JOLTS Job Quits. These reports offer crucial insights into labor demand and worker confidence, respectively. A high number of job openings could signal a tight labor market, potentially influencing the Federal Reserve’s stance on monetary policy. Concurrently, Factory Orders MoM and Factory Orders ex Transportation for April will be released, providing an updated look at demand for manufactured goods and overall industrial activity. Also at 7:10 AM PDT, the RCM/TIPP Economic Optimism Index for June will offer a measure of consumer and investor sentiment.

Throughout the day, Federal Reserve officials will be speaking, including Fed Goolsbee (9:45 AM PDT), Fed Cook (10:00 AM PDT), and Fed Logan (12:30 PM PDT). Their commentary will be closely scrutinized for any nuances in their economic outlook and potential implications for future monetary policy, especially in light of the morning’s data. Finally, at 1:30 PM PDT, the API Crude Oil Stock Change for May 30 will be released, providing an early estimate of US crude oil inventories, which can influence energy markets and futures.

I will be looking at pre-market earnings, such as CRDO & SIG, in the morning to see if we have a Gap and Go or Gap and Fade play. I will also look at CRWD, RBRK & AVGO 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.

• Celestica Inc. (CLS): Celestica Inc. operates in the technology sector, providing design, manufacturing, hardware platform, and supply chain solutions to customers in various industries. On its daily chart, CLS is currently displaying a cup and high handle pattern. The handle is consolidating on a key support level and resting on the 10-day exponential moving average (EMA), suggesting that buyers are absorbing supply and setting the stage for a potential continuation of its uptrend.
• Amazon.com, Inc. (AMZN): Amazon.com, Inc. is a global leader in the consumer discretionary sector, primarily known for its e-commerce platform and cloud computing services (AWS). On its daily chart, AMZN is also showing a cup and high handle formation. The handle appears to be developing with price action consolidating around a support level and the 10-day EMA. A decisive break above the resistance defined by the handle’s high would confirm this bullish pattern and suggest a potential continuation of its upward trajectory.
• Duolingo, Inc. (DUOL): Duolingo, Inc. operates in the consumer discretionary sector, providing a popular language-learning platform. The daily chart for DUOL is currently forming what resembles a Darvas Box pattern, characterized by a series of rising boxes or ranges where the stock consolidates after making new highs, often on decreasing volume. Currently, the price action is consolidating calmly along its 10-day EMA and near recent local highs, suggesting a period of accumulation within a defined range, potentially setting the stage for a breakout.
• Quantum Computing Inc. (QUBT): Quantum Computing Inc. (QUBT) operates in the technology sector, specializing in quantum computing and optimization solutions. On its daily chart, QUBT is exhibiting a cup and high handle pattern. The handle is consolidating on a clear support level and the 10-day EMA, indicating that the stock is coiling up after its initial move. A decisive break above the handle’s resistance would confirm this bullish pattern, potentially leading to further upside in line with the broader quantum technology market sentiment.

📊Additional things to consider tomorrow:
Reviewing the SPY market profile chart for the past few trading days, a distinct large balance range has been firmly established, encompassing a prolonged period of price acceptance. According to market profile principles, such balance areas serve as consolidation zones, and a decisive break above or below this range is typically expected to lead to a directional move with conviction.

Within this overarching balance, the last five trading days have formed a tighter, “mini balance range,” indicating a more immediate area of price acceptance. However, today’s session introduced some crucial nuances. Despite initial bearish attempts, price action notably failed to find acceptance lower and did not succeed in closing the overhead gap (highlighted by the gold rectangle), suggesting underlying buying support. Conversely, the bulls were unable to prevent the Point of Control (POC) and Value Area from shifting lower relative to the preceding three trading days, indicating that sellers had some success in pushing accepted value down within the mini balance.

This dynamic creates a complex picture where neither bulls nor bears fully dominated today’s auction within the context of the larger balance. The market’s inability to resolve the gap, coupled with the shift in today’s value area, sets the stage for a critical battle as price action navigates the boundaries of these nested balance ranges.

🧠 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.