Cinco de Mayo

The Weekly 21 has been a guide post for the overall market. In the last 12 months we've had 4 moves down to the 21, which at the time felt like panic, only to immediately bounce back to ATHs.

We finally lost the Weekly 21 early March. The loss of the weekly 48 signaled a vommy, and we vommy'd hard the week that tarriffs were announced.

I bring this up to say despite the huge puke in the market, we're now firmly back at the W21 after last weeks continued rally.

The yearly put level acted as support, then resistance, and we're back up against it - 5730 SPX. If we're able to close above the 5730 level I'll start to believe we're going up without a retest of the lows. Previously I had said that was my base case, and I still believe it has potential, but the rally has been really strong. Potentially a higher low to be put in before we continue up.

On the daily chart there's a bit more clarity on the push to bullishness. The Daily 200 served as a selloff point on April 2nd, and now we've finally recaptured it with it holding the last two days now. The D21 is starting to flip bullish as well. As always we can just continue higher, but I believe at minimum we should see a retest of the gap create May 1st, and then potentially revist the Quarters Put Trigger at 5490.

I think I'd want to see a clean break of the Put or Call trigger to feel good about directional bias. This week is especially pivotal given the FOMC rate decision coming Wednesday at 2p. Days leading up to and especially the morning of FOMC tend to be low volume chop. Best to be extra cautious until Jpow speaks.

Down to the hourly chart. We're very clearly bullish with HHs and HLs. A H&S is starting to form, but its not actionable until the neckline breaks, or a firm loss of the bull gap, which nicely aligns with the H48 as well --> vommy.

Bias is up though unless the 48, the daily gap and the put trigger break down.

On the SPY 24/5 hourly chart, we're looking a tiny bit less bullish just as the ribbon is getting skinnier. Our blast off level of SPY 550 may get retested if we break down the MD put trigger. But, again - just like SPX - the bias is up until a loss of the MD Put trigger or H48. I'm also taking note of the low volume coming into FOMC. And, with it we're starting to squeeze with lessening momentum down in the green zone on the stochastic. When the move happens, it will be meaningful.

It's a matter of being patient enough to have the mental and financial capital to execute once the move eventually comes.

If I were trading for the end of the month... Given we've spent the first 3 days above last months close, and above the ribbon, based on ATR probabilities, it's likely we hit 5800 by end of May. 5930 is Monthly +1 ATR and well within reason. The big question mark, is if that's the case, will we and how far will we pull back before going higher? The stochastic is signaling a mean reversion...

The May 30th 5800Cs are trading at $46 currently. This is certainly not the right place to get in, but with wide enough stops and confidence we can reach higher... it may not matter. If we were to reach 5930 by end of month the 5800s would close at 130 - almost 3x their current value.

The 70 delta 5/30 5525C is at $205. I'll also keep tabs on those to evaluate their fluctuation over the coming weeks.

Tomorrow my plan is to be patient and expect very little given the FOMC meeting. No trading for me today as I was busy with my other priorities. Doesn't look like I missed much though. And, I can't miss out anyway, because there is always another trade.