Can Nvidia Earnings Spoil The SPX Rally? May 29 Plan
Its probably starting to sound repetitive by now (considering I have started every single newsletter with this since April 6th), but trading is repetitive. In fact, if your doing it right, it should be the most repetitive, routine thing you’ve ever done (there is a reason algos are so good at it). To be specific, I have started every newsletter since April 6th by reminding readers the broad regime price is in: Buy Dips. 90% of successful trading is just getting the broad trend right. Conversely, most traders lose because they fight it.
We’ve had many dips since April 6th but the core theme is that they get bought, and the size of the rally is proportionate to the size of the dip. As readers know, my edge (Failed Breakdowns) exploits this, and I long alongside institutions after those “scary” selloffs when price loses a low, traps shorts, then recovers it. Last week ES saw 4 red days in a row including a massive 95 point trap down last Friday, and as a result, the subsequent rally was likely to be substantial.
I wrote last Friday at 4pm: “In a strong bull case for Monday, ES won’t even head back to support of this range, and will rather just hold 5809 or 5794, recover 5815-20, then head back on up to 5843 then 5850…After 5850 recovers, 5877, 5900, then 5925 are the next big stops on the upside as we work back towards the highs.” On Sunday, Monday, and yesterday, we saw exactly this. Right on Sunday evening, we recovered 5815-20, longs triggered. We then rallied to 5850, cleared it, then ran to 5925+ target yesterday.
Recall that last Friday’s deep flush to 5760 was triggered by the failure of a two day shelf at 5850, by recovering it on Sunday, ES put in that bear trap, and we were off. Today, it was up to bulls to consolidate the recent rally, and maintain that strength. Specifically, ES had spent since May 13th building a large range 5975 to 5800, and bulls wanted to see resistance. I wrote yesterday: “Its been an incredible run and the long from Friday morning is now up 152+ points. There is nothing for me to do but trail it until it ends. My general lean is always to defer to the trend. 5920-25=support and as long as it holds (or traps below quickly and recovers) 5945, 5957, then 5970-75 are next target slate...Perhaps dip there, then when the range is ready to break, 5995-6000, 6030, 6047, then 6072 are the next big targets up.” After running to 5945+ overnight, ES spent all day glued to 5920-25, trapping below.
We have Nvidia earnings at 420pm today and its the next big catalyst ES is waiting on. Can it spoil the rally or will momentum just continue higher (which is always the default). In today’s newsletter I’ll talk this, I’ll do a deep dive into the setup last Friday morning that caused this weeks 160+ point rally (its a great example of what I call a Level Reclaim, which is an important-to-know variant of my core setup, the Failed Breakdown). Finally, I’ll discuss the actionable trade plan for tomorrow.