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After nearly a month of textbook “buy-the-dip” setups and institutional-style failed breakdowns, ES (S&P 500 futures) is coiling tighter around the ever-magnetic 5925. Last week was a near-daily masterclass in how liquidity grabs precede sharp relief rallies. And just like the tape script said, 5877 flushed before recovering again and again. With a clearly defined range building since May 13 and an emerging inverse head & shoulders structure, this week may not just be chop—it could be the spark that kicks off a new leg.
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TL;DR
Rally With a Trapdoor
Friday’s double-dip below 5877 reinforced the “trap-and-recover” playbook — a recurring signal of large players accumulating beneath support.
Inverse H&S Taking Form
A potential inverse head & shoulders pattern has been developing since mid-May, centered around 5925 — breakout levels are clearly defined.
NVDA & AI Mania Cooling
Softer flows into high-beta AI names suggest the speculative hot money may be cycling — eyes on XLK’s leadership here.
Energy Sees Bid on Crude Reversal
CL_F bounces off $75 as OPEC+ jawboning hits — watch for tailwind correlations in XLE as it recovers trend strength.
We remain in a clear uptrend for ES, which has held since early April. While many sessions have felt like aimless chop, the overlay of structure reveals a repeating institutional pattern: failed breakdowns below key support levels, fueling efficient squeezes back into the 5925 pivot zone. For day traders, it’s been a week of rinse-repeat setups. For swing traders, this prolonged consolidation has signaled large accumulation. The regime is still dip-buying — but now we’re watching for a resolution out of this 3-week coil.
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Failed Breakdowns Around 5877
Friday gave us two clean examples: ES flushed below 5877 twice (at 8:15AM and during the PM session), formed wicks, reclaimed 5884, and squeezed straight back through 5920-25. Institutional tape behavior at its finest.
Inverse Head & Shoulders Structure
Since May 13, we’ve been forming what looks like an inverse head & shoulders, with 5925 as the neckline. Shoulders lean toward 5880 zones — a breakout above 5970 could complete the pattern with upside toward 6000+.
“Second Chance Trap" Plays
Each afternoon last week saw retests and deeper wicks below opening support levels — often providing cleaner entries than the morning flush. This setup has paid real Alpha for traders exercising patience.
Support: 5877 remains the key structural level — it has held intraday washes all week. Below lies 5850 as deeper flush test. Bulls lose conviction under this zone.
Resistance: Major resistance sits at 5970 (trendline + H&S neckline). Cracking this level cleanly opens measured move targets toward 6000–6020.
Magnet: 5925 is the mean and pivot point. Most action for three weeks has resolved back here — chop traders are home, but trend traders are watching for inflection.
Upside Targets: 5936, 5945, 5965–5970. Breakout sends us toward 6K+.
Same playbook until it breaks. Wait for Failed Breakdown signal, ideally under 5877 again. Look for wick, reclaim of prior day low (5884), and chase back into 5925 for partials. That said, the longer this pattern coils, the more meaningful the eventual break.
If we open strong and hold above 5945, a drive into 5970 is playable but that level is key resistance and could act as major rejection zone without proper flush/trap beforehand. If no clean flush or no confirmation of reclaim → sit out. Chop continues to be dangerous for impatient traders.
No shorts unless 5877 breaks with aggressive volume and fails to reclaim in a tight timeframe even then, perceived breakdowns have quickly reversed.
Expectations: A volatility expansion is near. Plan for either a clean breakout or a hard trap reversal session. Let the first 60 minutes show structure.
- Stocks slip ahead of jobs data; S&P 500 hovers near record – Reuters, 02 Jun 2025
- Why the tech rally may face headwinds this week – WSJ, 01 Jun 2025
- Oil rises as OPEC+ members extend voluntary cuts – Bloomberg, 02 Jun 2025
- What AI’s cooling means for broader equities – MarketWatch, 30 May 2025
- S&P 500 Could Break Higher or Retest 5850: Goldman Strategists – CNBC, 02 Jun 2025
Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before making investment decisions.