June 6th, 2024

The bulls currently have both the technical and macro momentum on their side. However, as the market climbs, we find ourselves in a limbo where there’s no clear support or resistance to gauge. All the bulls need to do for now is maintain their position and keep driving upwards.

It’s particularly challenging for day traders when the market begins to rally like this, as managing risk becomes more difficult. My key support and resistance areas are pretty far apart from here. When we’re hitting all-time highs, no resistance level is truly safe to take on the first test, because we can’t be certain if it’s resistance or not just yet. As we rise, support keeps getting further away. So, to stay long, you inevitably have to take a step back and widen your stop.

My strategy for now is to be patient. Wait for opportunities that seem unlikely, and when they appear, seize them. Trying to force things in a runaway market is not my style. This is a time when my long-term portfolio is thriving and I’m day trading less. There’s no need to be more active in this market at the moment.

I could foresee a situation where we keep grinding higher or sideways until the Fed Meeting next week, which could potentially be a turning point for the markets. Whether the Fed leans towards the bearish or bullish side is irrelevant, what matters is that it could trigger a change in positions.

One market segment I’m keeping an eye on is RTY. I find it puzzling that small caps can’t even garner interest in a bull market with falling rates and signs of a soft landing. If they start to show life, it could be a good trade for day traders. Conversely, if they begin to fall, it might cause some long holders in ES and NQ to realize there might be some real cracks in the economy, prompting them to rush and secure profits.

For today, my approach is to watch and wait. If we see a pullback in ES or NQ, I’ll consider going long. But I won’t be chasing this rally. Remember, keep it small and smart.

Cheers, DELI