Market Analysis for May 19th, 2021

E-mini S&P 500 Futures: Keep It Simple Stupid – Inside Week Whipsaw, Transitory Environment

Copying and pasting a section from our ES trade alert room’s premarket gameplan report. FYI, the ES trade room provides real-time entries and exits with pre-determined stoploss and target levels alongside with real-time lessons on strategy/risk management/psychology/momentum. We specialize in quick intraday alpha setups and short-term swings with duration of 2-5 days holding period. (some key levels + strategies have been redacted for fairness to subscribers)

  • Tuesday closed at 4111.50 which was below Monday’s 4136.50 low and we entered a neutral stance as of yesteday’s EOD print. We are heading into today with a neutral to bearish bias
  •  Overnight made lower lows and setting up -1% gap down across all US indices
  • FYI, price action is also below the daily 8+20EMA trending supports again so this environment is a transitory trend change/much tougher context to trade than easy on-trend setups 
  • It’s still projected as a massive inside week (4238.25-4029.25), a fierce battle between short-term bulls/bears to retain control. Price action now within the 61.8%-78.6% fib retracement of last week’s 4029->4179 bounce.
  • Don’t overtrade or overcompensate in this environment based on all this context/trend change transitory mode so BTFDers need to be fully adaptable
  • Below 4100 (our absolute must hold support going into this week) means that price action is at risk of backtesting last week’s 4029 low
  • Some key support levels before that are located at 4075/4060/4050 to gauge momentum
  • Need to see whether price action formulates a basing setup vs last week’s low area with a higher low or supports just get sliced through without looking back
     
  • Price action would need at least one daily closing print above 4120 to confirm some sort of stabilization event in the coming days. Followed by a daily closing print above 4180 to confirm higher lows is likely set in place

 

If you recall:

  • The current structure and context of this bull train is that the daily price action has been trending above the daily 20EMA since the first week of March
  • Then, this trend accelerated on April 1st when the price action broke above the multi-week resistance of 3950s-3970s the propelled the bull train to ride on top of the daily 8EMA for an entire month now until the May 4th breakdown into more significant support confluence.
  • Tuesday May 11th at risk of a short-term trend change on ES. FYI NQ+RTY already at lows
  • Wednesday May 12 broke below 4100 and confirmed a short-term trend change on ES. (decisively below trending daily 20EMA)
  • Thursday May 13 daily print confirmed short-term bulls stabilizing with the 4029.50 temp low 
  • Friday May 14 closed above 4150 and stabilized the price action with a significant temp bottom 
  • Monday May 17 in digestion/inside day mode and trying to build a basing pattern towards ATHs
  • Tuesday May 18 weak daily closing print and we transitioned ourselves back into neutral bias

Additional context from past months remain mostly unchanged (copied and pasted):

  • The shit hits the fan (SHTF) level has moved up to 3965 from 3650, a daily closing print below 3965 is needed in order to confirm a temp top setup/reversal for the daily+weekly timeframe. (the current April 2021 lows which was the breakout acceleration point of the past few weeks) 
  • A break below 3965 would be a strong indication of weakness given the multi-week trend of being above the daily 20EMA train tracks. For reference, the first week of April, the price ation has accelerated on top of the daily 8EMA to indicate that the bulls are in full control and continuously making higher lows and higher highs every couple sessions bottomed 
  • Different timeframes in this report so it may be overwhelming, make sure you know which timeframes you are participating and adjust gameplan + execution accordingly
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Ricky Wen is an analyst at ElliottWaveTrader.net, where he writes a nightly market column and hosts the ES Trade Alerts premium subscription service.