DAILY MARKET RECAP
Tuesday May 31, 2016
The following is be used for Informational purposes only. The charts are fact, however my interpretation is an opinion which I am sharing with readers. None of this is a recommendation to buy or sell anything. You must do your own due diligence.
Key Developments :
- No major developments
- Potential H&S top developing on the 5 min lower time frame.
- Larger Cup/Handle might be developing below April Highs.
In the weekend journal we talked about our number one priority is the April highs, and why. If you didn’t get a chance to read it, I suggest you do.
Everything we currently need to know can be seen in this chart. We have a potential Cup/handle developing on the larger time frame, however April high remains major resistance point.
We may have an undeveloped handle still as we have a mini H&S in the handle. If we were to take out today’s lows, we would target 2073, which would still give this bullish pattern potential even if we head down to 2073.
I would take much more comfort looking for a bottoming pattern down near the target to get long than being long up near the top of the range as the risk/reward id not good until April highs can be come support.
I took a small SPX short position into the close at SPX 2099, to try to play this smaller pattern. If I am wrong, I lose 5 points, if we play out to target, I make 25 pts. that is a 5/1 risk reward.
The Bottom Line:
After a very clear technical bottoming pattern last week, we see the potential for a smaller topping pattern on the 5 min lower time frame, but also the potential for a larger cup/handle play here just below the April lows.
I went out short and will use today’s highs as my area to get out with a target of ~2075. Above today’s highs likely triggers a larger cup/handle targeting much higher prices. We just have to watch to see what develops triggers and see’s follow through going forward. Be patient until you see the best risk reward setups.