SP500 Futures Trading Plan for 5/3/24
Recap: Bulls needed to recover core supports after losing them late in yesterday’s session and did so when the futures market reopened yesterday. This sparked a ~30+ point rally into the open today, but since I don’t trade in the after hours I missed this. During the cash hours today, the market moved down to check red channel support in the 5033-35 area and recovered core supports and so I went long. This was another example from this week of a textbook entry but a failure to really gain any momentum to turn this into a good trade. I was able to derisk this trade early enough to not take a full sized loss on the stop out.
A bit after the remainder of my position in the first trade was stopped out, the market moved well off of support at 5048 and then recovered the core supports again, turning in a good bullish engulfing candle. I took this trade again and it worked out very well. I exited in accordance with my risk management plan and since the next level was quite far away, I removed all the risk at 10 points and left a runner that I closed at the next target at 5100 (always a couple points before).
Balance/Trend: The market continues to trade lower within the red channel since the start of April, again finding support at the midline today and rallying. Since the April low was set, we’re starting to see a slight rising trend develop in the channel shared in the chart I sent yesterday, which may well be a bear flag as the market drifts higher within the fall trend channel.
Analysis: Bulls were able to recover core supports this week and close the day positive ahead of Apple earnings, set to be released this afternoon. After weeks of bearish action, it seems that this momentum has worn off some as the market trades in relative balance to last week. There are a lot of catalysts swirling, like earnings, inflation, interest rates, and yields, but none of them seems to have taken firm hold over market participants’ perception value. With the recovery of core supports, bulls will now look to break price out of the red channel to start a new leg higher. Bears on the other hand will look to break price from those supports and then breakout from the interior line of the red channel for a deeper leg down.
Detailed Trading Plan & Charts