If the Stock Market was a Restaurant, the Menu would have...
…Mesquite BBQ Bulls and Chicken Fried Bears! The market makers have been feasting on both bulls and bears as the Bull Trap & Bear Trap paradigm continues. Last Monday, May 1st, the S&P 500 hit the R1 Resistance Pivot Point, which served as a Bull Trap that sent the S&P 500 lower. However, on Thursday, May 4th, the market fell to the S2 Support Pivot Point which served as a bear trap as the market popped back up on Friday. Bulls got trapped…bears got trapped…and investors were basically flat.
The SPY is forming an expanding pattern (as shown below) and could reach the $420 level before perhaps setting another bear trap. The New Highs/New Low indicator shows weakness as more stocks are hitting new lows. Breadth (ADL) appears to be on a downtrend, as only a few leading stocks seem to be supporting the market. Volume (ADV) appears flat. Volatility is supportive of the market as the VIX is dropping under the 20 mark. The Global Money Supply (black line on the main chart) hints that the Fed is adding liquidity to support the market in light of the regional bank crisis.
Turning our eyes to sentiment, it appears that Smart Money is buying as Dumb Money is selling. This supports the idea that the expanding pattern will end up having a higher swing high upon completion of the pattern.
The Fear and Greed Model shows that fear building. Headlines of a new financial crisis, debt ceiling issues, and more violence between Ukraine and Russia are probably driving retail investors and traders to sell.
The Market Maker Move for the week is between $$419.53 and $405.73. The max pain point is $409. There are Call Walls at $422, $416, and $410. There are Put Walls at $400 and $395.
In terms of Cycles, the Cycle Composite shows that the SPY should be on an uptrend until 5/11. For next week, I am planning to trade on the long side but will remain vigilant when the SPY hits the $416 to $420 area. A venture into this price level could set up the next bull trap. First squeeze the bears and then rug pull the bulls. Rinse and repeat!
Disclaimer - All materials, information, presentations and ideas from Cyclesedge.com are for educational purposes only and should not be considered financial advice. For specific advice, one should consult a registered Financial Advisor. Nothing presented here should be considered as specific investment, stock, option, ETF, future, commodity advice. This blog may document actions done by the owners of this website, thus it should be assumed that positions are taken. If this is an issue, please do not continue using this website. All investments contain risk and some positions could lose more than the initial investment value. All readers must manage their own risk. This website takes no responsibility for possible losses, as the financial markets are volatile and unpredictable and opinions and forecasts provided here could be wrong. Past performance is not indicative of future results. Hypothetical or simulated performance based on past cycles or future projections have limitations and have no guarantee of being able to predict the future. Cycles can contract invert or extend in unpredictable ways. Past performance does not guarantee future results. This website provides no advice.