A month ago we were looking for a double bottom before thinking about going long and now we are less then 200 points from All Time Highs ( ATH) on the E-mini S&P 500. What has changed and how do we trade in this type of environment?
Unemployment
For the first time in weeks we have seen a decline in unemployment, there are still millions without a job but this could been seen as a small glimmer of hope. This small boost sent the S&P 500 up near 3% last Friday ( 6/5/2020), we will have to wait and see if this news can continue to prop up the market even though unemployment is still extremely high. Look for the jobless claims in the coming weeks to continue to get better and better. If numbers start to increase look for bears to possibly sweep in and push price back down.
Price Action
Back within 200 points of the all time highs after dropping a 1000 points is something that hopefully won't happen again any time soon! The major levels that are in play are, March's high right around 3120. We broke right through this level with ease last week and are now looking to make sure this continues to hold as support. Since we have broken above this level we are no longer consider to be in an inside month setup. You may have heard of an inside day candle and the rules are the exact same when it comes to inside months.
Below we can see an example of the inside month, many believed that we would be stuck inside this range for months, but the market is full of surprises!
On the weekly time frame we can see that price is showing us a V play or V type correction. This happens many times when price sells off to quickly and ends up reversing back to or near where the original sell off happened. We can see below that 9 out of the past 11 weeks have all been green. If you still have a bearish view on the market, you might want to seek psychological help. That's not saying in the coming weeks or months we won't drop back down. At the moment the BID is king. Levels to keep an eye on from the coming week(s) are 3200 this is the next psychological level that bulls will be looking at. Once past 3200 we simply look at 3300 and 3400 for the levels to beat.
What does this all mean for the future? As a wise man once told me when I first started trading" Shut up and trade the current price" This is something that many new traders need to focus on. Stop trying to forecast what price will do a week or month from now and worry about what is going on right this moment and what you can do to make money off of it. With that said there is defiantly a very bullish tone to the current market, there has yet to be any bad news that has been bad enough to flip the trend and start moving down. Simply trade the price action follow the trend and be sure to follow ALL your rules.
Conclusion
Price is moving up meaning that traders need to be looking to get long. Taking any shorts at the moment would be considered counter trend and unless you are a counter trend trader then stick with our K.I.S.S acronym ( Keep.It.Super.Simple) and follow the trend.