What Did I learn about the Market Today?
Today’s trading on the SPY ETF witnessed a gap down to the 5-day simple moving average (SMA), which subsequently acted as support, propelling the price to close as a bullish engulfing candle. This pattern suggests a strong reversal and continuation of the prevailing bullish “meltup,” characterized by price action oscillating between the upper Bollinger Band and the 5-day SMA. Furthermore, the SPY remains within the upper half of an established trendline, indicating sustained buying pressure with bulls aiming for the recent all-time highs.
For bears to gain control, patience is key. The recent Moody’s credit downgrade has yet to significantly impact the current bullish trend. A change in market direction would likely require a discernible bearish structure, such as a head and shoulders pattern where the right shoulder encounters rejection at the 200-day simple moving average (SMA), as visually indicated on the chart with the red pen. Until such a pattern with bearish confirmation emerges, the bullish momentum appears to remain in control.
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 one ‘big plays’ in play 1) There was a beautiful 5-minute opening range breakout with MACD cross.
Personal Reflections
- What Did I Miss? I missed GLD, VVPR & AVGO (ORB) and SOFI with (10 EMA bounce). Also, missed a cup and handle scalp on the SPX.
- What Trade Did I do? I had a few Tactical Longs.
- What Worked Today? ORB with TML and Tactical Longs off key moving averages.
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.
