They Won't Crush the S&P Today...Right?
Let's be careful as we're ahead of the long holiday weekend.
Technical Edge —
NYSE Breadth: 30% Upside Volume
Advance/Decline: 22% Advance
VIX: ~$21.75
The tape remains tough. We have seen our open positions go from 5-6+ to just 1-3, and we are getting stopped out more quickly after taking our first trim on the positions.
The trend in the market remains in a “sell the rallies” mindset, but the S&P is dancing around last week’s low.
All of this is to say that the environment is still difficult and one must take that into consideration when trading and computing position sizes!
Volume should evaporate today, as over the last few days, many fund managers likely positioned how they wanted to for the remainder of the year as they step out of their offices for the last time until 2023.
That doesn’t mean bulls have a cake-walk necessarily, just that extreme selling pressure may take a break too.
One small note: The weather is horrendous today. Take that into consideration when or if trading. You could lose power in the blink of an eye. Consider OCO bracket orders or at the very least, an active stop. A broker you can trade through your phone — anything. The last thing anyone needs is a handful of ES contracts moving badly against them and no way to get out ahead of the holidays.
One other note: Feel free to just enjoy the long weekend and/or only trade with smaller size and on high R/R setups. No one needs a big loss before the holidays.
S&P 500 — ES
I’m keeping things short today, with just the S&P.
Two things come to mind here.
Notice how the ES was harshly rejected from the 3920 level and the declining 10-day moving average. That’s not surprising, as it was the high R/R sell setup we were looking for.
However, look at how the ES sliced through last week’s low at 3855, pushed down below this week’s low, then acted like a basketball underwater, erupting higher into the close.
I’m using 3855 as my line in the sand. Feel free to write these levels down:
Below 3920 and the last week’s low (3855) keeps me bearish. If we break the Globex low of 3830, it opens the door down to 3800, 3788 (yesterday’s low) then 3750-61.
On the upside, over 3855 puts 3870 in play, then 3890-92, then the 50-day and 10-day moving averages are back in play. 3920 remains the gatekeeper to higher prices.
SPY
Line in the sand: $381. Above that and technically, ~$387 is in play. For now though, $387 (+/- $1) remains stiff resistance.
Over $390 and the bulls are back in control.
On the downside, below $381 keeps $378 in play. Below $378 and yesterday’s low of ~$375 is on the table, followed by $372.
Open Positions — Do NOT let the winners turn into losers!!
Numbered are the trades that are open.
Bold are the trades with recent updates.
Italics show means the trade is closed.
WMT — ½ size & long from 142.75. Trimmed ¼ at $145.25 and ¼ at 145.75.
B/E Stop. Look for $146.50 to 147.25 on the next trim.
SBUX — Long from $96.50, with a ¼ to ⅓ trim at $99 yesterday.
For the calls, long the Jan. $100 calls from $1.75, with a ¼ to ⅓ trim at $2.65 yesterday (+50%).
B/E stop for both positions now and ideally looking to trim down to ½ to ⅓ on $99.50 to $100 area (test of the declining 10-ema)
UUP — Ideally needed a close back over last week’s high of $27.95 and we closed AT $27.95. Long against $27.75 is fine with a ¼ to ⅓ trim at $28.15 to $28.25. Ideally looking for $28.40+
If anyone bought LNG, can use $147 as their stop-loss.
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Relative strength leaders →
LNG — keep an eye $150
SBUX — 10-week ema at $96.75
DE — gap-fill & 10-week would be attractive for potential longs
HON — weekly
CAH
LMT, RTX, NOC
MET — weekly
GIS
CI
MCD — weekly
ENPH, FSLR, CEG — solar has strength
VRTX, UNH, MRK
XLE — XOM, CVX, COP, BP, EOG, PXD (Weekly Charts)
Economic Calendar
