We've Arrived at a Decision Point

The S&P 500

The S&P remains in a broader uptrend that began in late October 2023, but this week we saw a test to that structure. Price dipped below this key uptrend line but quickly reclaimed it, finding support on this line as well as the weekly’s 20 EMA. In Friday’s trading session, we saw a high-volume reversal, which could signal a potential bounce. The bigger question remains: is this just a retest before breaking lower, or the start of a true bullish reversal?

Right now, I lean toward this being a bounce rather than a full reversal, meaning we could see another attempt to break down through the October trendline in the coming weeks. That said, trades to the upside may still be viable if the market follows through early next week. If price pops above the daily moving averages, I think we are likely see some choppy action as the market decides whether to resume the uptrend or roll over again.

Key Levels to Watch:

• 6,010 Short-term resistance. Price must reclaim this level to continue higher.
  

• 5,954 Right on the long-term uptrend area. Holding above this level keeps the reversal in play, but failure increases breakdown risk.
  

• 5,840 Breakdown level. A break below this would signal a deeper pullback, likely toward the weekly’s 50 SMA.

Potential Scenarios:

🔼 Bullish A hold above 5,954 and a move through 6,010 could lead to a push toward the recent highs. A strong reclaim of the daily moving averages would shift momentum higher.

🔻 Bearish A failure at 5954 or a rejection at the moving averages may confirm this as a retest before another leg down. A break below 5,773 would indicate weakness, and could lead to a deeper correction.

⚖️ Neutral If price moves above the MAs but lacks follow through, we could see chop between 5,840 - 6,010, signaling indecision.

I'll be watching next week to see if this reversal holds or if it was just a retest before a breakdown. If selling pressure builds, we could see the first meaningful correction in months.

SFM

On Friday, I exited a put on SFM before my exit criteria was met because of emotions. I’ve been doing much better moving through my emotions, but Friday definitely tested my control and patience. I had a few new trades that were not working, (including an extra trade I put on from greed and my strong downside bias), and because I had recently locked in some big gains, I just said, enough, I’ll just close them all. So instead of holding on to some of my positions, I closed everything. This may not have been inherently “bad” since I decided to give myself a break and just be out. But I would have liked to have had a little more mental endurance to see each individual trade through.

Now, SFM can go in either direction or nowhere next week. If the market decides the green candle it made Friday wasn’t enough for a rise, we could see SFM (and many others that were at a decision point Friday), continue to decline.

Key Levels to Watch:

• 140 - 143 This area denotes a lot of potential support. It is where the recent higher low was made made, where the longer-term uptrend line is, and the daily 200SMA.

• 155 Resistance. A move above this weakens the bearish case.

• 138 First major support. If price loses this, momentum could accelerate to the downside.

Potential Scenarios:

🔼 Bullish If price reclaims the 10 and 20 EMAs on the 4h chart, it could push back up, negating the breakdown. If the market stays strong, this could chop or recover.

🔻 Bearish If SFM stays below the 4h EMAs, the price may continue to decline. I especially like the last bit of selling on the 1h chart (with high volume) in Friday’s session. A move below 138 would confirm weakness and open the door for a bigger move down to the weekly’s 50 SMA, invalidating the longer-term uptrend.

⚖️ Neutral This could just stay in a digestion/indecision mode and bounce around between 138 and 155, which may still present opportunities for intraday traders.

IBM

IBM is still in a strong uptrend, but signs of short-term weakness are emerging. The double top on the daily chart suggests sellers are stepping in, and there is a chance we see a gap fill to the downside. Currently, price is far from its uptrend line and the 50 SMA on the daily, meaning there is plenty of room for a healthy pullback without breaking the longer-term trend. IBM typically retests its 20 EMA on the weekly chart, so if the selling continues, there is space for a further decline before finding strong support. However, until key levels break, the overall uptrend remains intact.

Key Levels to Watch:

• 247 -250 This is where the double top formed. If price struggles here again, it reinforces the bearish case. And a hold here can lead to a bounce.
  

• 238 - Weekly 20 EMA IBM often retests this moving average, making it an important downside target.
  

• 228 – 50 SMA on the daily. If selling accelerates, this would be a deeper correction area, aligning with trendline support.

Potential Scenarios:

🔼 Bullish If IBM holds above 247 and reclaims at least the 20 EMA on the daily chart, it could push back up and attempt another breakout. A strong reclaim of 255 may lead to another test of the highs. The overall uptrend remains intact unless further breakdowns occur.

🔻 Bearish If price stays below 250 and starts rolling over, a move toward 238 or 233 is likely. Given IBM’s history of retesting the weekly’s 20 EMA, it could act as a key downside target. If 233 fails, selling momentum could pick up, bringing 226 into play as the next area of support.

⚖️ Neutral If IBM consolidates between 238 and 250, it may enter a choppy digestion phase, offering shorter-term trading opportunities before the next big move. 

A few thoughts this week!

Measuring Progress in Trading

If you’ve been trading for a while, you know that measuring progress isn’t as simple as just looking at profits. Profits are the black and white of trading…1000%. Either you are making money, or you aren’t. But true progress in trading isn’t just about the numbers, it’s about the shifts in your mindset, emotional control, and ability to recognize and navigate your own behavioral patterns.

You can have a lucky year, make a ton of money, and still never be profitable again if your mindset and processes aren’t solid. But if you develop the right habits, refine your approach, and improve your ability to self correct, that’s what creates sustainable success.

January & February: A Case Study in Progress

January started off a little rough for me, but I finished the month profitable. February had a slightly less rough start, but I was able to gain traction quickly and ended up with one of my best months.

Now, toward the end of February, after that nice decline, I started to see some exhaustion in the selloff and I noticed that I didn’t want to let go of my bearish theory. And you know, if you are trading the swings of the daily or 4h chart, even if we continue a decline later, sitting through a bounce can wipe out profits.

Anyways…I had a strong bias that we’d see continued downside…And even though there were clear signs that momentum was shifting in the short term, I wanted to be right.

Remember, do we want to be right? or do we want to be profitable? Profits please! 🙋🏽‍♀️

So, I gave back a little bit of profit, not a huge amount, but enough to notice. In the past, this would have spiraled into multiple trades, multiple losses, and a much bigger setback. But this time, the difference was:

✔️ I caught myself in the bias sooner.
✔️ I journaled about it in real-time.
✔️ I only took one extra trade instead of several.
✔️ When the market flipped, I didn’t immediately jump into calls.
✔️ I paused and recognized that my confidence wasn’t there, and unless we were going to have a V-bottom recovery, a beeline up may not be probable.

In the past, I would have also felt the need to trade the reversal, to “make back” what I lost. But I took a step back and told myself: I had a great month. I don’t need to chase this.

Progress in Trading Is Subtle, But It’s There

One of the hardest things to accept in trading is that you may never completely eliminate certain habits. I know that when I have a good run, my tendency is to get a little greedy and give some back. I’ve worked on this a lot, and I will continue to do so.

The growth isn’t in never repeating a mistake. It’s in catching yourself sooner, limiting the damage, and learning to pause. Progress in trading isn’t just about making more money year over year. Yes, that’s the goal, otherwise, why are we doing this? But the real work is in the details:

• Becoming aware of your cycles and patterns

• Recognizing when you’re slipping into old habits

• Taking corrective action faster

• Letting go of the need to be right

This applies to more than just trading, it’s true for any pattern in life. You may not break free from a cycle overnight, but if you’re self-aware enough to step outside of it, even for a moment, that’s progress. And in trading, those subtle shifts are what create long-term profitability. 🙌🏽 🥳