11/3 Trading Plan - Thursday Recap and Day Ahead

Recap

In the past week, we saw an impressive rally of 180 points, marking one of the best trades of the year. This was largely due to a textbook failed breakdown bottoming setup triggering on Sunday evening, demonstrating the power of the short squeeze. The rally continued for four days straight, reaching a peak at a major pivot point of 4336. This marked the largest rally since the broad correction began on August 1st.

The Markets Overnight

🌏 Asia: Up strongly
🌍 Europe: Up
🌎 US Index Futures: Up strongly
🛢 Crude Oil: Up
💵 Dollar: Down a lot
🧐 Yields: Down a lot
🔮 Crypto: Down

Major Global Catalysts

• Non-Farm Payrolls come in light showing a slower jobs market

Snapshot

Daily

4-Hour

Key Structures

The market's structure is currently framed by several crucial levels that demand attention. The most pivotal of these is the 4135 level, which has emerged as a significant point of contention between buyers and sellers. This level served as a major resistance point and is now a key marker to watch for potential support.

The 4020 level is also of note, having previously acted as resistance. As the market dynamics evolve, this level could be tested again, potentially reinforcing or invalidating its role as a resistance-turned-support.

Moreover, the levels of 3928 and 3797 are essential to monitor as they have provided substantial support in the past. Any movements towards these levels could indicate a market seeking stability.

The market has reached an important juncture today, as the SPX has rallied back above its 200-day moving average and also reclaimed the long-term secular bull market uptrend line that extends back to the 2020 Covid crash lows. Breaking back above these key long-term technical levels suggests the recent correction may be over and the primary bull market may be resuming. The ability to hold these levels on a closing basis today would be an encouraging technical development and increase the probability that the October lows marked the end of the pullback. Continued strength as we head into next week would further solidify the case that this bull market still has room to run.

Support Levels

The foundations of our market are clearly defined by critical support levels. Our analysis highlights key supports at 3928, 4059, and 3797. These levels are pivotal, having been tested and held firm under market pressure, signifying their importance.

It's imperative for investors to monitor the 4452 and 3535 zones as these levels have also served as significant support. Their role in historical price movements has been substantial, and they remain crucial for the market's underpinning.

Resistance Levels

As for the upside barriers, our analysis identifies resistance at 4135 and 4020. Overcoming these levels could signal strength and a potential bullish continuation. The minor resistance levels at 3905, 4594, and 4479 also pose hurdles for price advances and should be watched closely by traders.

Trading Plan

In the context of recent market movements, it is paramount to focus on preserving capital. The period following a significant price trend is often marked by uncertainty, making it a challenging trading environment. Caution is advised, with a preference for observing the market's reaction to key levels rather than committing to new positions.

Wrap Up

After a period of gains, the market appears to be entering a consolidation phase. Although the momentum is with the bulls, there is a palpable risk of pullback. Close observation is required to see if the critical support at 4269-71 holds, as it was instrumental in the last upward movement. Conversely, if the 4302 support gives way, it could lead to a notable decline, offering opportunities for bearish positions.

Disclosure: This is not financial advice and is for informational purposes only. Please consult a professional financial advisor before making any investment decision.