Chop or Pop? Tackle This Week's Tricky Market On $ES_F & $SPY
Intraday Update
Coming into this week, ES tested support at 4112 Friday with a double bottom. So far it’s been a choppy start to the OPEX week, with key support at 4132-29. There have been six round trips between ~4150s and 4120s, and we observed good follow-through in the market. 4155 just rejected down to 4136.
Last Week
We saw the market consolidating with 4165 resistance and 4115 support, as well as range expansion and complex trading patterns. The big picture context is a 1.5-month-long "megaphone" pattern, while the shorter term shows a smaller megaphone pattern with a 60% upside breakout bias. We also discussed the importance of level acceptance and not trading constantly in our trade recap.
Plan for the Week
Our focus this week is on navigating a tactical chop range between 4112 and 4181. The bull case for Monday is to defend 4129 and aim for 4145, 4158, and high 4170s. The bear case for Monday involves a loss of 4129 as the first warning, with a crack of 4112 for a real selloff. Expect tactical, trappy trading overall.
Economic Events
Bonds Update
Support Levels
4129-32, 4118 (major), 4112 (major - broadening formation support), 4106, 4099 (major), 4089, 4078-81 (major), 4061, 4040-4045 (major), 4031, 4017-20 (major), 4005, 3980-85 (major), 3967 (major), 3950-54, 3937 (major).
Resistance Levels
4147, 4158 (major), 4172-75 (major), 4180, 4191 (major), 4205, 4212, 4217, 4227 (major), 4236 (major - broadening formation resistance), 4243, 4252, 4270-75 (major), 4286. 4158 as well as 4172-75 are decent zones to look for reactions as is 4191.
Summary
In summary, the market experienced consolidation and complex trading patterns last week. This week, our focus is on navigating the tactical chop range between 4112 and 4181, with both bull and bear case scenarios in play. Economic events, such as April Retail Sales and Industrial Production, may impact decisions on rate pauses and cuts.
Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decisions.
Coming into this week, ES tested support at 4112 Friday with a double bottom. So far it’s been a choppy start to the OPEX week, with key support at 4132-29. There have been six round trips between ~4150s and 4120s, and we observed good follow-through in the market. 4155 just rejected down to 4136.
Last Week
We saw the market consolidating with 4165 resistance and 4115 support, as well as range expansion and complex trading patterns. The big picture context is a 1.5-month-long "megaphone" pattern, while the shorter term shows a smaller megaphone pattern with a 60% upside breakout bias. We also discussed the importance of level acceptance and not trading constantly in our trade recap.
Plan for the Week
Our focus this week is on navigating a tactical chop range between 4112 and 4181. The bull case for Monday is to defend 4129 and aim for 4145, 4158, and high 4170s. The bear case for Monday involves a loss of 4129 as the first warning, with a crack of 4112 for a real selloff. Expect tactical, trappy trading overall.
Economic Events
- April Retail Sales: A potential downside surprise may affect rate pause and rate cut expectations.
April Industrial Production: Expected to be flat; a higher-than-expected reading may support the Fed's hawkish stance.
May Philadelphia Fed Manufacturing Survey: An above-expectations reading is seen as inflationary.
Bonds Update
- 2-year Treasury yield at 4%, little changed
10-year Treasury yield advanced to 3.494%
30-year Treasury yield climbed 5.5 basis points to 3.831%
Support Levels
4129-32, 4118 (major), 4112 (major - broadening formation support), 4106, 4099 (major), 4089, 4078-81 (major), 4061, 4040-4045 (major), 4031, 4017-20 (major), 4005, 3980-85 (major), 3967 (major), 3950-54, 3937 (major).
Resistance Levels
4147, 4158 (major), 4172-75 (major), 4180, 4191 (major), 4205, 4212, 4217, 4227 (major), 4236 (major - broadening formation resistance), 4243, 4252, 4270-75 (major), 4286. 4158 as well as 4172-75 are decent zones to look for reactions as is 4191.
Summary
In summary, the market experienced consolidation and complex trading patterns last week. This week, our focus is on navigating the tactical chop range between 4112 and 4181, with both bull and bear case scenarios in play. Economic events, such as April Retail Sales and Industrial Production, may impact decisions on rate pauses and cuts.
Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decisions.
