Plan For Friday SessionPlan for Friday: supports are 5343, 5338 (major), 5328, 5322, 5308-10 (major), 5306, 5298 (major), 5278 (major), 5268 (major).
Yall should know what I’m going to say here. We had a monster rally today, 160 points. My absolute least favorite time to trader is after a big trend day. Longs are risky - chasing with no pullback after this large of a rally is non sense. Shorts are risky - we are in a squeeze. And the odds of complex, messy chop are high. As a result, tomorrow is capital preservation Friday for me, and I’ll just be taking it light, protecting what I have from this week. From here, 5338-42 is first down. This has been the brick wall resistance all week, and now, for the first time, we are closing above it and its now support. A possible entry could be something like if we test 5328 and recover the zone. Below there, we flush down the levels again, and this may be a sort of macro failed breakout. If so, that means all longs will be very risk and should be done with small size. 5308-10 is first support down. If we are knifing down, one could try it micro sized, or better yet, wait for it to flush and reclaim. Use common sense. Below there we knife down the levels. 5268 would be one spot of interest to watch for a bounce, and if we test it then recover 5280 it is even better. Below there we probably flush down to 5228-33 again, reaction zone, then down to 5186-91, which I would be willing to try one final small long at before we start the next macro leg lower into the 4900s.
Resistances are: 5351 (major), 5362, 5372, 5378 (major), 5388, 5394, 5398 (major), 5409, 5414-16 (major), 5427, 5433, 5439 (major). I am currently long and I won’t be flipping short tomorrow on strength. For those who are looking for spots to try reaction shorts though, 5378 would be one zone, then 5438 would be another. Either could provoke sells.
Buyers case: Bulls did some good work today, holding 5186-91 major support, then recovering the 5338-42 area. We are only a few points above now so its still chance for a trap - we need to take it level to level. Generally though, we remain in a recovery leg since Monday, as long as above that 5186-91 level. Buyers want to defend 5338-42 level now (or if it does fail, quickly flush to something like 5328 and reclaim), and begin working up towards the next major backtest magnet which is now 5438. There are big resistances en route like 5378 any of which can end the leg. I normally give spots to add on strength, but I cannot do so here when are at the highs of day. I can only say that I would see any overnight flagging above 5338-42 and below todays high as being bullish, and favoring continuation.
Sellers case: the real sellers case begins on the fail of 5186-91. Obviously 5186-91 is very far away now, so in order to short there I obviously would not just be blindly shorting below. I’d need to see a strong reaction there or failed breakdown and good final bounce, then I’d consider short 5180ish. On a shorter-term basis, 5269 is also a level I’d consider a breakdown short of. Same drill - I need to see a bounce there and/or failed breakdown first. On the shortest term basis, 5308-10 failure likely provides a good level to level short. Same drill, I need evidence the zone is used up (this zone is already fairly well tested). After this, I’d look short 5304.
In general, Today I was looking for a rally to 5338-42, and we got there and beyond. Post-rally trading is the worst trading, so I will be in capital preservation mode tomorrow. My general lean though is to respect the 5338-42 late day breakout. As long as it holds, we can work up to 5378 next. Decision point there - and if bulls can push through, we likely head all the way to 5414, 5438. If 5338-42 fails, ES has to do more work on the downside as per the above plan.
