#202425 - a weekly price action market recap and outlook - sp500
Good Day and I hope you are well.
sp500 e-mini futures
Quote from last week:
comment: My take last week was, that as long as bears keep it below 5400, we could be in a trading range. Bulls used the pullback on Tuesday for a new ath and got a strong follow through on Wednesday to pulverize that previous ath and trade above 5500. That target price was my first measured move target from early 2024 and it could continue up to 5600. Market refused to print a bear bar on Thursday and Friday which leaves the market maximum bullish going into next week. The big issue with that long trade is, you are buying right under the ath in a buy climax, in multiple wedges, far far above any ema. This trade risk:reward equation is as bad as it gets but the probability is high. But what is your target? You can join momentum but all of my calculated targets end at around 5600. Buying pullbacks is the reasonable thing to do until it stops working. My final thoughts on the market this week is the following chart, which speaks for itself. This is peak bubble behavior and the next 1000-2000 Points will be made on the downside.
So given the current pattern of the s&p500 I do think we are in the last blow-off top of this bull cycle and will enter a trading range which will evolve into the new bear trend once we break below 5000. This market is made up of 7 stocks which get all the liquidity. My best guess on the path forward over the next months is in the weekly chart below.
We will probably spend more time between 5000 - 5600 to form a credible top. A head & shoulders top would be the most probable outcome.
current market cycle: Max bullishness & peak bubble territory again. Will end over the next weeks.
key levels: 5400 - 5600
bull case: Bulls buying it all on the 7 stocks. Volume on this up move since May is absolute atrocious but that does not help anyone so far. It’s only going up and as long as bulls keep making money literally buying every dip, we continue up. I have 3 wave series leading up to 5500-5600 and all end there.
Invalidation is below 5300.
bear case: What do the bears have going for them? Nothing and if anything, pure speculation and low probability stuff. The chart is showing multiple wedges, we are clearly in multiple third pushes up (W5) and volume is drying up. Once the institutions begin taking profits on the magnificent 7, we will see big moves down to end the trend and enter a trading range. The bull trend line around 5300 will be hit in the next 2-4 weeks and afterwards I think we will form a lower high before we will be on our way to 5000 again. As of now I think bears want to see a big climactic bull bar to 5600 before they begin shorting again.
Invalidation is above 5620.
outlook last week:
→ Last Sunday we traded 5355 and now we are at 5502. 5500 was my target if bulls trade above 5400 and I hope you made some of those 100 points. Good outlook it was.
short term: No interest in buying here unless it’s a momentum scalp. I will look for weakness and a trade back to a test of the daily 20ema which is around 5400. Bulls are still heavily favored in terms of probability.
medium-long term: Bull trend is in the last legs and this will soon pull back much further and form a big trading range. 5600 could be hit but the next bigger points are made trading back down to 5300 and 5000 over the next weeks/months.
current swing trade: None
Chart update: This is my best guess on how the next 3-9 months will play out. Two-legged correction down to 5000 over the next 4-8 weeks, followed by a last lower high before the next big bear trend will begin. That’s only price-wise but not time wise. Could get there much faster or much slower.
sp500 e-mini futures
Quote from last week:
bear case: Bears are still inside the bull flag and making lower lows. As long as they are staying below 5310-5320, their bear case lives on but is weak at best. They could not get consecutive daily closes below the daily ema and the reversal on Friday made the daily, weekly and monthly bar more buying than selling signals. You could argue that we are building a similar structure to April, where we had the double top and then only lower highs until bears finally accelerated it down big time and we got below 5000. Could this happen here too? Of course. We will find out on Monday or Tuesday.
comment: My take last week was, that as long as bears keep it below 5400, we could be in a trading range. Bulls used the pullback on Tuesday for a new ath and got a strong follow through on Wednesday to pulverize that previous ath and trade above 5500. That target price was my first measured move target from early 2024 and it could continue up to 5600. Market refused to print a bear bar on Thursday and Friday which leaves the market maximum bullish going into next week. The big issue with that long trade is, you are buying right under the ath in a buy climax, in multiple wedges, far far above any ema. This trade risk:reward equation is as bad as it gets but the probability is high. But what is your target? You can join momentum but all of my calculated targets end at around 5600. Buying pullbacks is the reasonable thing to do until it stops working. My final thoughts on the market this week is the following chart, which speaks for itself. This is peak bubble behavior and the next 1000-2000 Points will be made on the downside.
So given the current pattern of the s&p500 I do think we are in the last blow-off top of this bull cycle and will enter a trading range which will evolve into the new bear trend once we break below 5000. This market is made up of 7 stocks which get all the liquidity. My best guess on the path forward over the next months is in the weekly chart below.
We will probably spend more time between 5000 - 5600 to form a credible top. A head & shoulders top would be the most probable outcome.
current market cycle: Max bullishness & peak bubble territory again. Will end over the next weeks.
key levels: 5400 - 5600
bull case: Bulls buying it all on the 7 stocks. Volume on this up move since May is absolute atrocious but that does not help anyone so far. It’s only going up and as long as bulls keep making money literally buying every dip, we continue up. I have 3 wave series leading up to 5500-5600 and all end there.
Invalidation is below 5300.
bear case: What do the bears have going for them? Nothing and if anything, pure speculation and low probability stuff. The chart is showing multiple wedges, we are clearly in multiple third pushes up (W5) and volume is drying up. Once the institutions begin taking profits on the magnificent 7, we will see big moves down to end the trend and enter a trading range. The bull trend line around 5300 will be hit in the next 2-4 weeks and afterwards I think we will form a lower high before we will be on our way to 5000 again. As of now I think bears want to see a big climactic bull bar to 5600 before they begin shorting again.
Invalidation is above 5620.
outlook last week:
“Bullish above 5320 for another leg up to 5500 or higher but only if it happens until end of Tuesday.”
→ Last Sunday we traded 5355 and now we are at 5502. 5500 was my target if bulls trade above 5400 and I hope you made some of those 100 points. Good outlook it was.
short term: No interest in buying here unless it’s a momentum scalp. I will look for weakness and a trade back to a test of the daily 20ema which is around 5400. Bulls are still heavily favored in terms of probability.
medium-long term: Bull trend is in the last legs and this will soon pull back much further and form a big trading range. 5600 could be hit but the next bigger points are made trading back down to 5300 and 5000 over the next weeks/months.
current swing trade: None
Chart update: This is my best guess on how the next 3-9 months will play out. Two-legged correction down to 5000 over the next 4-8 weeks, followed by a last lower high before the next big bear trend will begin. That’s only price-wise but not time wise. Could get there much faster or much slower.
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