What Did I learn about the Market Today?
Today’s price action on the SPY presented an interesting battle between buyers and sellers, ultimately concluding with resilience from the bulls. Early in the session, the SPY moved below its 5-day simple moving average (SMA), suggesting potential weakness. However, this downward momentum failed to find sustained acceptance, as evidenced by a strong recovery. The day concluded with the formation of a bullish hammer candle, signaling that buyers stepped in aggressively at lower prices, pushing the close back above the 5-day SMA.
Furthermore, today was an “inside day,” meaning its entire price range was contained within yesterday’s range. This, combined with the previous two sessions, forms a three-day balance on the market profile. According to balance rules, the market is poised for a directional move once it breaks out of this established range. Should the SPY break higher, the bulls will likely target the recent all-time highs, aiming for a continuation of the prevailing “melt-up” trend, where price action consistently oscillates between the rapidly ascending 5-day SMA and the upper Bollinger Band. Conversely, a break lower would require clear acceptance below the 5-day SMA and a decisive breach of the current red trendline to signal a shift in sentiment and potential for further downside. The market’s next move out of this three-day balance will be crucial for determining the short-term trajectory.
There are usually one or two ‘big plays’ each day. If you identify what the ‘big plays’ are and the key stocks, trading becomes easier. Why? Because you’re getting yourself in the right stocks at the right time. Today, there was only one ‘big plays’ in play as the market chopped in range for most of the day. The main play was 1) End of Day recapture of the 5-Day moving Average.
Personal Reflections
- What Did I Miss? I missed YALA with a post-earnings ORB/MAL (Moving Average Long) and MAL with FNGR.
- What Trade Did I do? I traded NEM and Free-rolled and have two losing trades. The ABVE was a horrible decision with a beautiful chart. The stock had a volume of less than 200k.
- What Worked Today? GLD-related stocks.
Today’s SPY Trade Setups and Analysis
- We had an opening drive to fill the gap. Was waiting for structure around the 5-Day SMA. There was a structure for a bearish H&S and nothing for the bulls.
- The blue algo was helpful for continuation. However, the structure was not deep enough for my liking.
- The yellow algo was present and provided a nice cup and handle trade.
