/ES (SPY) Gap Fill Long with Confluence/Odds Enhancers!While wariness remains re: larger timeframe structure for US equities (+ continued weakness in US gov’t bonds, USD strength), we are stalking near/intermediate-term longs via downside futures gaps in both the ES and NQ. The YM and, to a lesser extent RTY, are also approaching possible buy zones, thus bolstering this trade’s attractiveness.
While the primary premise of the trade is filling the downside gap into “demand”, odds are enhanced via the trendline and anchored VWAP, which coincide with ~4300 (major psychological #). When placing equity index futures trades at LionHart, we closely watch potentially correlated markets (VIX, DXY, ZF/N/B…). Volatility has had a nice move alongside the downdraft in stocks, but may be a bit overaccelerated as it approaches “supply” (red lines). If equity indexes fill downside gaps and pierce buy zones, watch the VIX and other related markets for reversal signals.
Regarding trade concerns/targeting, we sometimes prefer subjective target/trade management via small timeframe charts; that methodology will be applied here. New overhead supply has formed ~4360 and traditional resistance traders may defend ~4340-50, so trade profit margin is not ideal. Given that equity markets have a bullish bias, though, we still believe capital is worth deploying. If you can purchase multiple contracts, consider scaling ahead of the abovementioned levels and hold runners if prices press higher. The red zones = supply, where unfilled sell orders remain.
Thank you for reading, thoughts/feedback welcome, and good luck/happy trading!
Jon
