This serves as a recap for myself and is not to be viewed as any kind of trade suggestion. All views expressed are my own.
So today we had a weaker than expected PPI, a slightly stronger than expected Retail Sales but the core number came in slightly lower than expected. Additionally, the weekly jobless claims number was slightly higher than expected for the initial claims while continuing claims were slightly lower than expected. Powell also gave a speech and said that long term rates may stay higher for longer.
But regardless of what economic numbers came into the market, what matters is the market’s reaction to it.
And what transpired was a bull trend day, that opened lower but ended on its highs.
Initially, price opened gap down with a downward pointing EMA. I was thinking at the time that this could be the pullback we’ve been waiting for on the day chart, since price was in a consolidation mode yesterday.
Price tested the EMA and rejected which was a good sign. But what was less than a good sign was that price was generally having a hard time dropping below the open, and once below it quickly attracted buyers. During the consolidation, price was depressed by the EMA, but it was at the same time making higher lows.
The second and the most obvious warning was when price formed a bearish reversal bar at 9:45, but instead of the next bar being a bearish trend bar to break down lower, price instead formed a bullish trend candle that closed on its high and back to the EMA.
This means that sellers are losing control and buyers are more than willing to get in below yesterday’s low.
As soon as the next bar closed above the EMA and on it high forming a bullish trend bar, bulls have seized control of the action. What followed was a quick spike and channel bull trend.
My guess for why this happened was that based on the daily chart, price appeared ready to stage a pullback this morning, and people were either short or on the sidelines waiting to see what happens. Apparently, more people are willing to buy below 5900 than selling. As soon as bulls demonstrated their strength over bears, a combination of short covering and new longs quickly caused an imbalance that moved the market.
In the afternoon, price made a few attempts to get below the EMA, but each was met with strong buying around SPX 5900 level.
What’s more notable is that in the final 10 minutes of cash trading, price first made an attempt to sell below EMA with a bearish reversal bar closing on its low, but that was followed by a strong bullish 5-min candle with 2 large bull 1-min bars at 14:56 and 14:59.
All of this is saying that there is a significant buying interest in the market that overwhelms sellers. And price was able to form a bull outside bar on the day. This means to me that we are more likely to go higher than lower. MES 6000 and SPX 6000 seems to be the likely target for this run.
As I noted in yesterday’s post, I won’t be looking to chase here because price is pretty far away from the EMA and we didn’t have any real pullback since Apr 22. However, there is prominent buying pressure present relative to selling pressure, and we have yet to see a volume spike on a big bull trend day to mark a climactic high, so shorting here is likely unwise either.
If I had long positions, I’d be looking to buy some protection using puts. If not it’s probably better to just stay out and wait for a pullback to around 5700-5800, ideally around EMA to confirm a higher low and then get in to target a retest of the ATH.
Just remember that price could stage a climactic final run with a strong bullish breakout above 6000 to lure in late bulls, only to rug pull from under to achieve that pullback. So manage your trade accordingly and always keep in mind that anything can happen in the market.
The Ephemeral Tourist
May 15. 2025 @ 9:24pm CST
The Ephemeral Tourist 