Daily Focus – May 28, 2025

📊 What is the Market Narrative?
Today’s session on the SPY commenced with a notable gap up over the holiday weekend, immediately setting a bullish tone. This price action effectively confirmed a higher low, following a successful break and retest of the $576.50 level, which now appears to be acting as nascent support. Crucially, the SPY demonstrated resilience by holding above its 200-day simple moving average (SMA), a key long-term trend indicator, and managed to close decisively above the short-term 5-day SMA.

This confluence of factors presents a clear bullish indication in the immediate term. Furthermore, a significant technical development to monitor is the potential for the 20-day SMA to cross above the 200-day SMA. Such a “golden cross” would be a powerful bullish signal, often interpreted as the beginning of a sustained uptrend, and would add further conviction to the market’s current trajectory. As long as these key moving averages and established support levels hold, the path of least resistance for the SPY appears to be to the upside.

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:

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 cup and handle structure off local highs and a handle right shoulder off the 5-day SMA
  • Looking for a tilted 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 rejection off 5-Day SMA and precision orange algo.
  • Looking for a deeper cup to close and reject off the $581.37 pivot or 5-say 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, May 28, 2025, the economic calendar features several reports that will provide further insights into the US economy. The morning begins with the MBA 30-Year Mortgage Rate at 4:00 AM PDT, offering a glimpse into the cost of home financing, which can influence housing market activity.

Later, at 7:30 AM PDT, the Energy Information Administration (EIA) will release its weekly Crude Oil Stocks Change and Gasoline Stocks Change. These reports are crucial for energy market participants, as significant changes in inventory levels can impact crude oil and gasoline prices, with knock-on effects for inflation expectations and consumer spending. Unexpected shifts in these figures can also drive volatility in energy futures (/CL) and related equities.

Adding to the week’s insights, Federal Reserve officials will continue to make appearances. Their commentary will be closely watched by market participants for any nuanced perspectives on the current economic environment, inflation outlook, and potential implications for future monetary policy. These statements, combined with the energy inventory data, will likely contribute to shaping market sentiment in tomorrow’s trading session.

I will not be looking at any 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.
• Meta Platforms (META): Meta Platforms is a dominant force in the Communication Services sector, primarily through its Interactive Media & Services industry, encompassing its social media platforms and investments in virtual and augmented reality. On its daily chart, META 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 absorption of supply by buyers and a potential for continuation of its uptrend.
• BlackLine, Inc. (BL): BlackLine, Inc. operates in the technology sector, providing cloud-based solutions for finance and accounting automation. On its daily chart, BL is also showing a cup and high handle pattern. The handle is consolidating effectively on a support level and the 10-day EMA. Additionally, the chart reveals a price gap above, which often acts as a magnet for price action and could be a target for the stock to close if the bullish pattern confirms its breakout.
• Exelixis, Inc. (EXEL): Exelixis, Inc. is a biotechnology company within the healthcare sector, focused on discovering, developing, and commercializing new medicines for cancer. The daily chart for EXEL is exhibiting a flag pattern. This continuation pattern, typically a small rectangle or parallelogram, is consolidating into its 10-day EMA. The pattern suggests a temporary pause in price action before a potential resumption of the prior trend, with the 10-day EMA providing dynamic support.

📊Additional things to consider tomorrow:
Several critical technical observations are evident at this juncture after analyzing the attached weekly chart of the SPY. Firstly, the SPY is currently finding formidable support at the 40-week Simple Moving Average (SMA), depicted by the red moving average. This level is particularly significant as it previously acted as a strong resistance zone during the “Trade War sell-off” earlier in the year. The transformation of this historical resistance into current support underscores a potential shift in market structure and a strengthening of the underlying bullish trend.

Secondly, price action has gravitated back into the multi-week trading range that characterized the market’s consolidation beneath the all-time highs. Within this range, weekly candles have consistently straddled the 10-week SMA (green moving average), as highlighted by the white shaded box. This behavior reflects a period of indecision and accumulation/distribution within this broader equilibrium zone.

Finally, the market has established a clear two-week balance range, visually depicted by the gold shaded box. According to market profile principles, such balance areas serve as consolidation points where liquidity accumulates. A decisive break higher from this two-week balance would provide strong confirmation of the 40-week SMA as robust support, and balance rules suggest that the market is likely to continue its auction in the direction of this breakout, potentially targeting higher resistance levels. Conversely, a definitive break to the downside from this balance, especially if accompanied by a rejection of the 40-week SMA (causing it to revert to a resistance role), would signal a shift in market control to bears, potentially leading to further price depreciation. The resolution of this two-week balance will be a critical determinant of the SPY’s near-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.