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(Free) Remember What We've Said About Mondays -- Slow & Steady
Friday played out well for the bulls. Now they need to play defense too.
Danny Riley
June 05, 2023
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Our View
Trading is not getting easier, nor is investing — none of it is easy. From the very wealthy to the small investor, where do you invest?
Bonds, real estate, metals or the beaten down stocks that were victims of the Covid-19 pandemic that have never really rallied? Or do you just go all-in on the 5 to 12 market leading names? You can like the markets or dislike them, but one thing both parties can agree on is that the markets are going up right now.
One of the questions I get asked all the time is, “when is it a good time to buy stocks?” Call me a simpleton, but I always say the same thing. “After they sell off.”
Obviously, that's not an easy thing to answer, especially when the rally is so narrow and only a few names. It’s also hard when you don’t know the other person’s risk tolerance or time horizon.
Our Lean — Danny’s Trade Plan
This is Danny Riley’s personal trading plan for the day.
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MiM and Daily Recap
The ES traded up to 4257 on Globex and opened Friday’s regular session at 4254.75. From there, it immediately rallied up to 4273.75 at 9:44 and then sold off down to 4249. rallied up to 4168.25 at 10:16 and that’s when I put this in the MrTopStep chat:
IMPRO: Dboy :(10:37:02 AM): going to 4286-90 today
The ES pulled back to just above the VWAP at 4257.50 and then made four separate new highs at 4270.75, 4277.50, 4286.25 and 4287.25, pulled back down to 4277.25 and then back-and-filled its way up to a new high at 4291.50 at 1:01. The ES made another new high at 4294 at 1:31, rallied up to 4297.75 at 3:47 and traded 4291.50 as the 3:50 cash imbalance showed $2.2 billion to buy and traded 4289.25 on the 4:00 cash close. After 4:00, the ES traded in a narrow range and settled at 4288.75 on the 5:00 futures close, up 60.75 points or +1.44% on the day.
In the end, everything went according to plan during the Fry-Day Jobs/option squeeze. In terms of the ES’s overall tone, it was firmer than the NQ. In terms of the ES's overall trade, volume was on the high end of what we have been seeing at 1.88 million contracts traded.
Technical Edge
NYSE Breadth: 81% Upside Volume (!)
Advance/Decline: 86% Advance (!)
VIX: ~$15 (On Friday it hit the lowest level since June 2021)
A move above Friday’s high and a flush below it could put some short-term “risk-off” in play as we did have a strong finish on Friday.
This morning’s push looks like we should be able to make a small trim in SBUX. Bonds/TLT could still give us a trade based on last week’s criteria.
SPY
How do we like that $427.50 extension? From here, keep an eye on Friday’s high. Above it puts the 61.8% retrace of the bear-market range in play at $429.61.
SPY Daily
Upside Levels: $428.75, $429.50 to $430
Downside Levels: $425.75 to $426.25, $425
SPY Hourly
Those are the downside levels in the SPY. The first levels is the H1 10-ema and the 50% to 61.8% retrace zone. The second level is the 78.6% retrace, one of my favorites, (but I doubt to see that today).
Here’s what it’s like for the SPX and ES:
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Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)
** = previously mentioned trade setup we are stalking.
Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B. Now Add META, AVGO, UBER, CRM and AMZN.
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Feel free to build your own trades off these relative strength leaders
Economic Calendar
