Slowest Week Of The Year For SPX, but Volatility Likely Incoming. May 23rd Plan
The month of May started off with a bang, and on May 6th, ES broke out of a textbook, month long bull flag at 5155, despite the bearish sentiment at the time and calls for “sell in May and go away”, price always tells the truth and as traders we need to listen to it and follow it, ignoring the opinions and sentiment of the commentary and analysis class. My target for this move was a re-test of the all time highs, and I wrote on May 3rd: “5155: Resistance of the major red downtrend channel/flag shown in the below chart. Leg to revisit the highs begins above here”.
Last Wednesday we arrived at the all time highs target, and since then, ES has done nothing for a full week with SPY putting it lowest non-holiday trading volume since 2017. It has been basing sideways in a range for a full week now, digesting this monster move, and coiling tighter and tigher. I have warned about this range daily since Friday, re-affirming again yesterday: “As stated for days, we are coiled extremely tight now and I consider 5347 to 5302 to be the range still, with 5347 to 5322 being an even tighter range inside it”. Overnight/yesterday, we ran to 5347 resistance, then this afternoon, dipped down to towards support of the range before pushing back towards 5322
Today after hours is Nvidia earnings, and this may be the catalyst ES is waiting on to finally leave this tightly coiled range. In today’s newsletter I’ll talk my approach to trading earnings, I’ll do a run down on the failed breakdown (my core setup) that originally got me/readers long yesterday, and this was a good example of what I call a dual failed breakdown, which is a key variant of this pattern. Finally, I’ll discuss the actionable trade plan for tomorrow.