SP500 Futures Trading Plan for 5/1/24
Recap: Resistances at 5143-45 held overnight and the market then checked this spot shortly after the open and rejected, leading to ~75 points of selling and filling the gap down to 5091 before making its way to the red channel lows. Unfortunately I didn’t get much of a signal for this one and did not trade it. The selling briefly halted at support at 5091 and I wrote that I’d want to go long from there if the market could move back up above 5104-05 and so I traded this, though the entry signal was not great so I traded with less size. This was certainly a bit of fighting the trend. I was able to derisk some of this trade (capturing some profits) but ended up cutting the rest once the buy signal was invalidated and price was unable remain in Friday’s range, which is when the gap was formed.
Balance/Trend: Price has trended lower all month and I’ve just redrawn this channel (red) to better capture channel resistance and to align with how the market has traded this month. In the longer term, the market is trending higher within the yellow channel. Despite this selling though, trade this week is mostly contained to last week’s value area.
Analysis: In the span of four months, market participants have gone from enthusiastically buying up the market with the expectation of three rate cuts this year to selling it and expecting possibly none at all. Though the battle against inflation has mostly ended, there’s still a lot of noise around getting it all the way down to the Fed’s 2% goal. Bears currently are in control of the market in the near term and will look to break price down further below the midline support from this channel. The FOMC interest rate decision is tomorrow and there should be further volatility in store.
Detailed Trading Plan & Charts