Happy Sunday! After reviewing the charts, I've decided to keep my critical ES levels the same heading into this week as not much has changed. In lieu of a new Market Prep, please refer to last week's article if you missed it:
https://www.traderade.com/post/market-prep-week-of-april-17-2023
As seen on the 1hr ES Range Chart above, the S&P500 spent another week "at rest" consolidating in the 4100-4172 range. I'm now even more interested in leaning into breakouts from either side of this range as I believe we have the potential for an explosive move. Rather than flipping a coin and guessing which way we'll go, I'm simply planning to wait patiently for the breakout.
Main Catalysts
In my opinion, we have 2 main things to keep an eye on this week while navigating the markets:
Big Tech Earnings (Microsoft and Google on 4/25, Meta on 4/26, and Amazon on 4/27)
Core PCE Price Index Data on Friday, April 28th premarket
Weekly Pivot
While I still think 4100 is the most important ES level this week, I'll essentially be using the entire 4100-4172 range as a Pivot, preferring long trades above 4172 and shorts below 4100. The market has demonstrated everything in between is a "Chop Zone," giving me very low-convictions for any trades initiated in this range.
I'm still watching the 4075 area for a rebid as well. This is dangerously near SPX 4050, where some speculate dealers will have to be short gamma, so it shouldn't surprise us to see longs step back in here and try to defend:
Final Thoughts
I strongly believe this will be a great week to focus on Technical Analysis, despite the the numerous fundamental catalysts (earnings). Anyone that's been trading for a while knows the market's reaction to earnings is not always "logical" (especially initial price reactions) and having a strong bias this week could be disastrous. It's impossible to say with certainty what is or is not priced in. I know I sound like a broken record and I have no intentions of coming off as "preachy," it's also a reminder for myself. There are times when trading is "comfortable" and other times when it's quite uncomfortable. Considering my macro outlook is bearish but the technicals are undoubtedly bullish, it's safe to say this is a recipe for being naturally uncomfortable in any position.
In my experience, the mindset needed for sustainable day trading is wildly different than that required for successful swing trading and investing. If you're a day trader and struggling to navigate the dichotomy of "Bullish technicals, Bearish macro/fundamentals" allow me to momentarily take you down a rabbit hole...in case you find this principle helpful in your trading:
I enjoy things that blow my mind and challenge any existing paradigms through which I perceive the world around me. My favorite realm of exploration for mind-bending concepts is the study of time, theoretical physics, and good ol' fashioned science fiction. In reading about Emergence Theory and the concept of time (e.g. Italian physicist Carlo Rovelli has written fascinating things about the latter), I came across a concept from science fiction that's been surprisingly useful for navigating weeks like Big Tech Earnings. The theory states that any moment in time could theoretically be our first moment of consciousness, with pre-programmed memories giving us the illusion of a past. THIS moment, right now, might be your first moment of true consciousness. In other words, you've just taken your first breath outside of "The Matrix" and nothing prior to this moment actually happened.
Wild, right? Despite the fact that it's most likely not true, there are elements of this outlandish theory that can be applicable for day traders: Sometimes it's best to approach the charts with no concept of what came before this moment in time. With no biases, we can simply trade the charts in front of us while watching order flow in real-time. If we can master this while still practicing wise risk management, it opens us up to trading both sides of the market during the day, helping to ease the natural discomfort the market presents when the technicals are bullish but the fundamentals are bearish.
My goal is to practice this mindset this week, as I've historically struggled to trade Big Tech Earnings due to my own biases. If there's one thing I know for a fact about trading it's that the market will always continue to surprise me, never ceasing to do the unthinkable when it makes the least sense. With that said, I do think the market will finally move this week and I want to be mentally prepared to ride the coattails of those moving it, no matter what direction they choose. The only thing that can prevent that is my own biases.
Apologies for the unusual Market Prep, but with the key levels still valid from last week I thought it would be a good time to focus more on the mental-game than reposting the same (virtually unchanged) charts.
Be safe and be fluid this week,
Horse