Massive Long Opportunity to End Rare Red Streak, Maybe
Edge Levels (ESM4): 4937, 4958, 4963-77, 5008-14, 5029-37, 5045-53, 5081-84
You can access the MGI document HERE for the latest Edge Levels and insights.
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Happy Monday, Retail Trading Team. It’s the best day of the week, and Mr. Market is celebrating the quiet news environment by trying another Gap-Up.
SPY 0.00%↑ has opened higher in four of the past five sessions before selling off.
And while I don’t think Price will reach its mid-term bottom before opening lower, the stats are certainly suggesting a relief bounce today:
So, we’ll see if the bullish momentum holds.
I’ve outlined below where I’m looking for trades today.
Five Trades for RTH 4/21/2024:
Backtest of 5081-84 (short). Two stars. I prefer longs today, yet the mid-term trend is unquestionably down as long as SPY 0.00%↑ is below 506.22. So, I’d fade the squeeze here (also Four Sigma) with relative confidence. Caveat venditor1: the short-term bear/bull pivot is currently 5045-53.
Reclaim of 5045-53 (short). One star. Price looks like it will open RTH in the upper third of the Expected Move, right below this critical supply zone. As noted above, this area encompasses the short-term pivot, so I’d look for one more rejection here. I’d be looking to flip into a Backtest long at 5029-37 (also one star) if Price started to build a base. Yet, I’m willing to give sellers room if Overnight Inventory remains 100 percent net long and the Gap unfilled. This is a tricky trade, and the squeeze risk is high. I’ll be using wide stops and small size here.
Reclaim of 5008-14 AFTER Gap fill (long). Two stars. Price is beginning to make higher highs and lower lows. As you can see in the chart above, buyers have managed to overcome the trendline cluster, which is now support. Longs also have an edge after such sustained selling, so we’d be really fortunate to get this opportunity today.
Backtest of 4963-77 (long). One star. There are three Price behavior patterns near Gaps: “chop,” “fade,” and “go.” A Price excursion into this wide zone today would imply “Gap Go,” which favors the sell side. Price would reclaim more trendlines the deeper it penetrated this zone. Still, I see demand as untested here and would be willing to scale into longs accordingly. This very strong zone contains the 100 SMA and an Island Value Area. Be aware of the same trickiness as the bear/bull pivot zone above.
Breakout of 4958 (short). One star. I must include this trade despite the probabilities and location beyond the Expected Move. Mr. Market often does what you least expect, and I think this would be the apparent “most unexpected” trade today. I’d need to see textbook Acceptance to take it.
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LEGEND’s word of the day. It means “seller beware.”