📊 What is the Market Narrative?
Today’s session saw the SPY continuing to trade within its established multi-day balance range. This sustained period of price acceptance reflects a market currently in equilibrium, awaiting a definitive catalyst for its next directional move. A notable technical development observed on the daily chart is the 20-day simple moving average (SMA) crossing above the 200-day SMA. This “golden cross” is typically viewed as a bullish long-term signal, suggesting strengthening underlying momentum. Concurrently, the 5-day SMA is flattening out, indicating a loss of its previous sharp upward or downward momentum, which often precedes a consolidation or a shift in the short-term trend.
In light of these technical dynamics, maintaining patience and adhering to market profile balance rules remains paramount. The market is positioned to move with conviction once it breaks out of this multi-day balance. Tonight’s NVIDIA (NVDA) earnings announcement serves as a significant potential catalyst, capable of injecting the necessary volatility to resolve this equilibrium. Therefore, the prudent approach is to avoid becoming “foolishly being liquidity” by trading blindly into uncertainty. Instead, observing how the market reacts to NVDA’s news and how price action resolves from the current balance range will be crucial before committing to a directional bias.
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, see below for the 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 construcive price/volume action. Little details, but they matter. Of course, vice versa for the short-side.
Here is my daily process:
- 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.
- 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.
- 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 cup and handle structure off l20-day SMA and a handle right shoulder off the 5-day SMA
- Looking for an IHS and right shoulder over a 5-day SMA.
- Gap and continuation in white algo
- BEARS
- Look for continuation in the precision orange algo if we gap lower.
- Looking for a handle off the current cup close with a bear structure underneath the 5-Day SMA and close the gap.
- 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, Thursday, May 29, 2025, the US economic calendar presents several key data releases that will offer further insights into the economy’s current state. The morning will begin with the Chicago Fed National Activity Index for April at 5:30 AM PDT. This broad-based index provides a comprehensive measure of overall economic activity and can signal inflationary pressures or economic slowdowns.
Concurrently at 5:30 AM PDT, the widely watched Initial Jobless Claims report will be released. This weekly figure provides a timely gauge of the labor market’s health, with unexpected increases potentially signaling weakening employment trends. Also at 5:30 AM PDT, we’ll receive the S&P Global PMI Flash readings for May, covering Composite, Manufacturing, and Services sectors. These purchasing managers’ index reports offer an early look at business conditions and sentiment across various industries, providing a forward-looking perspective on economic growth.
Later in the morning, at 7:00 AM PDT, the Existing Home Sales for April, along with its month-over-month change, will be released. This report provides a crucial pulse on the housing market, reflecting demand and inventory levels. Finally, Federal Reserve official Neel Kashkari is scheduled to speak at 7:30 AM PDT. His commentary will be closely watched for any signals regarding the Federal Reserve’s stance on the economy and monetary policy, especially in light of the day’s fresh economic data.
I will be looking at NVDA & CRM pre-market earnings in the morning to see if we have a Gap and Go or Gap and Fade play. I will play earning butterfly lottos or double calendar plays for Friday for NVDA, COST & CRM.
🎯 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.
- The Trade Desk (TTD): The Trade Desk is a technology company in the interactive media and services industry, providing a self-service cloud-based platform that allows buyers to create, manage, and optimize data-driven digital advertising campaigns. On its daily chart, TTD is forming a cup and handle pattern, with the handle consolidating into the 10-day EMA. Notably, the chart shows thin structure with gaps both above and below, suggesting that a decisive break from this pattern could lead to quick price movement in either direction as the market efficiently fills these liquidity vacuums.
- Palantir Technologies (PLTR): Palantir Technologies operates in the technology sector, specializing in data analytics software and services for government agencies and commercial enterprises. On its daily chart, PLTR 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.
- Dutch Bros Inc. (BROS): Dutch Bros Inc. is a rapidly growing drive-thru coffee chain within the consumer discretionary sector, specifically in the restaurants industry. On its daily chart, BROS 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.
- Newmont Corporation (NEM): Newmont Corporation (NEM) is a leading global gold producer within the materials sector, primarily involved in gold and copper mining. On its daily chart, NEM 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 precious metals market sentiment.
📊Additional things to consider tomorrow:
Reviewing the SPY market profile chart, the past few days of price action have established a significant large balance range, indicating a period of broad price acceptance and equilibrium among market participants. Within such a balance, price tends to oscillate until a decisive breakout occurs. According to market profile balance rules, a sustained break above or below this range typically leads to a directional move with conviction, as the market extends its auction to seek new areas of value.
Interestingly, the last two trading days have formed a “mini balance range” or a “balance within a balance,” akin to “Inception’s dream within a dream” concept. This tighter consolidation within the larger established range suggests that while the broader market is still in equilibrium, participants have recently found a narrower band of accepted value. The resolution of this smaller, more recent balance will likely dictate the immediate short-term direction, but ultimately, the market’s bigger move will depend on its ability to break out of the overarching large balance range. Traders will be closely monitoring which boundary (of either the mini or large balance) is breached to ascertain the market’s next significant directional play.
🧠 Get Your Mind Right
- 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.
- If you’re in any trade, protect aggressively early candles, please. Especially after large candles, protect.
- 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?
- Be patient with entries. 3 quality trades a day (Not 3 trades an hour). Be patient with setups.
- 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.
- You’re a Winner. Act Like it! Be disciplined. Be victorious in your rules and discipline. No silly mistakes.
- 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.
- 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.
- 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.
- 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.
