SP500 Futures Trading Plan for 4/22/24
Recap: After lots of overnight volatility, the Friday open was right back at the Thursday close. I was looking at 5050 as an important pivot and wrote “If we start to move lower tomorrow, it’s difficult to not want to jump onboard for the move down to 5023. I’d look for an entry candle [at 5050]”. We got a pretty decent entry signal here that I’ll cover in the video, so I went short. I was a little over vigilant and began to capture profits before that target, which caused my runner to close a bit early.
As has been the case lately, we got a second setup that I decided to take due to being overly vigilant on the first. The market moved right down to supports at 4999-5003 and turned in a decent, though not textbook, signal. I entered long right around 5010 and captured profits at the 5023, leaving a runner with a trailing stop which was pulled higher and then taken out profitably.
Balance/Trend: Bears have taken control this week and the market is one time framing lower for six consecutive days and three consecutive weeks. Zooming out to a multiyear view, price is still within rising trend channels but the pace higher has slowed dramatically after losing the medium and short-term rising trends. I’ve adjusted the pullback channel in pink to account for the sharp slope.
Analysis: After months of trending sharply higher on hopes of three rate cuts this year, sticky inflation has cast some doubt on rate cuts at all. The Fed has long communicated that the fight against inflation has gone well but that there could be bumps in the road in bringing it down, and so time will tell whether or not this 6-7% pullback was an overshot by bears or if a higher for longer rate regime will push the economy into recession. Bulls can start to rebuild their case by recovering core supports and will eventually want to pull price out from the steep pink channel. Until either or both of those things happen, bears retain control and will look to break price back into the black chanel and perhaps move all the way to the yellow channel lows, which marks the trend up from the bear market of 2022.
Strategy Video, Detailed Trading Plan, Levels, and Charts