May 6th, 2024

The market holds a promising bid. The stage is set for the major indexes to continue their rally this week, potentially returning to the path for new yearly highs. Last week involved a tug of war, testing both the weak-handed longs and shorts. Dual-directional activity dominated, but the bulls have emerged victorious in this short-term battle and are ready to claim their long-term victory to new highs.

One of the most challenging aspects this year is understanding market shifts that happen in an instant. Lows can appear imminent one moment, and the next, highs are in play. The reason? The crosswinds of the Fed, rates, earnings, geopolitics and other factors beyond our control as short-term traders. The key is to recognize and adapt when the daily charts favor either the bulls or the bears.

My focus today is on the ES pursuing their weekly target that I posted last week at 5186. Both NQ and RTY have achieved their weekly targets and are eyeing higher levels. I don’t foresee fading this market and will concentrate on long setups in my day and swing trades.

Worth mentioning is last week’s turnaround in rates. ZN (10 YR) was and remains in the same bullish technical setup as equities. Rates don’t need to continually drop; they merely need to stop rapidly increasing. I can see ZN settling in this area, possibly holding rates steady for the next couple of months. The key is to avoid sudden breaks that could spook equity bulls. If rates continue to drop (ZN Rallies), it’ll only fuel the bulls’ momentum.

Even if you opt to fade this market for a scalp, remember the larger picture: technicals are strongly bullish, . Keep it light and tight.

I will be live tonight on Discord at 4 ET. Here’s the link to set your reminder if you’d like to join us:

Cheers, DELI

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