#202501 - priceactiontds - weekly update - sp500
Good Evening and I hope you are well.
tl;dr
sp500 e-mini futures: Neutral. Much less bearish than dax because the pull-back above 6100 was so strong. We are right below the most important price 6000 and with it the bear case lives or dies. If bulls can go above again and test the bear trend line around 6050, the odds for the bears become really bad. Much more likely outcome then is more sideways inside the triangle. If bears do a strong move below 5900 on Monday/Tuesday, they took control again and odds are decent for the big second leg down. It’s 50/50 for me right now who wins this.
comment: 6000 is the big round number for both sides to close above or below. The longer bears can close below, the better the odds for a second leg down. I do think bear’s fumbled their chance for now a bit with the strong bullish close on Friday. If bulls continue higher on Monday we will likely test the bear trend line 6040ish again and it will be interesting to see if big sellers come around again. If the bears would have been stronger, this second bounce at 5870 wouldn’t have happened. The current triangle could continue for couple more days.
current market cycle: Trading range
key levels: 5870 - 6100
bull case: Strong close on Friday and it’s reasonable to expect more upside on Monday. The current descending triangle pattern has room for a couple of more days. Bulls who scaled into longs with a stop below the October and November low 5797 are making money and bears would need to build bigger selling pressure below 5860 for them to cover. I don’t think many bulls will hold long on Monday if we fail to trade above 6000.
Invalidation is below 5860.
bear case: Bears are not doing enough below 5800. Bulls printed a decent double bottom to buy. Now they need to stop the market from finding acceptance above 6000 again. If we stay below 6000 and go more sideways between 5860-6000, I do think bears are favored for the second leg down because scaling in bulls can’t hold long if we break below 5860 and late bulls who got trapped above 6100 will likely also give up on a bigger pull-back above 6100 again.
Invalidation is above 6100.
short term: Neutral between 5900 - 6000, bullish above 6000 for at least 6040 and bearish only below 5860. Shorts near 6050 are great r:r wise and I will take them for a swing.
medium-long term - Update from 2024-12-22: Ultimately 5200-5300 in 2025. Again, rough guess as of now and since we have not seen a strong first bear leg, these targets are the lowest I am willing to give an honest outlook about. If bears surprise and we see a huge leg down to 5500, we will go much lower for the second and third leg.
current swing trade: None
chart update: Nothing
tl;dr
sp500 e-mini futures: Neutral. Much less bearish than dax because the pull-back above 6100 was so strong. We are right below the most important price 6000 and with it the bear case lives or dies. If bulls can go above again and test the bear trend line around 6050, the odds for the bears become really bad. Much more likely outcome then is more sideways inside the triangle. If bears do a strong move below 5900 on Monday/Tuesday, they took control again and odds are decent for the big second leg down. It’s 50/50 for me right now who wins this.
comment: 6000 is the big round number for both sides to close above or below. The longer bears can close below, the better the odds for a second leg down. I do think bear’s fumbled their chance for now a bit with the strong bullish close on Friday. If bulls continue higher on Monday we will likely test the bear trend line 6040ish again and it will be interesting to see if big sellers come around again. If the bears would have been stronger, this second bounce at 5870 wouldn’t have happened. The current triangle could continue for couple more days.
current market cycle: Trading range
key levels: 5870 - 6100
bull case: Strong close on Friday and it’s reasonable to expect more upside on Monday. The current descending triangle pattern has room for a couple of more days. Bulls who scaled into longs with a stop below the October and November low 5797 are making money and bears would need to build bigger selling pressure below 5860 for them to cover. I don’t think many bulls will hold long on Monday if we fail to trade above 6000.
Invalidation is below 5860.
bear case: Bears are not doing enough below 5800. Bulls printed a decent double bottom to buy. Now they need to stop the market from finding acceptance above 6000 again. If we stay below 6000 and go more sideways between 5860-6000, I do think bears are favored for the second leg down because scaling in bulls can’t hold long if we break below 5860 and late bulls who got trapped above 6100 will likely also give up on a bigger pull-back above 6100 again.
Invalidation is above 6100.
short term: Neutral between 5900 - 6000, bullish above 6000 for at least 6040 and bearish only below 5860. Shorts near 6050 are great r:r wise and I will take them for a swing.
medium-long term - Update from 2024-12-22: Ultimately 5200-5300 in 2025. Again, rough guess as of now and since we have not seen a strong first bear leg, these targets are the lowest I am willing to give an honest outlook about. If bears surprise and we see a huge leg down to 5500, we will go much lower for the second and third leg.
current swing trade: None
chart update: Nothing
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