Morning Update for Subscribers
Bull Momentum Builds as Shorts Fuel the Fire
📢 Morning Update for Subscribers – Bull Momentum Builds as Shorts Fuel the Fire
📊 Open Pivots:
$ES: 5692
$NQ: 20106
📌 Market Overview – Green Light for Bulls After a Strong Close
Yesterday’s daily close above 5600 for $ES was a significant technical victory for buyers—the first time in weeks we’ve seen such strength confirmed at the close. This has effectively given bulls the green light to continue buying, and it's catching many late bears off guard.
This morning, prices are pressing up against the 5700 handle, and sellers are beginning to feel the pressure. The market is not just rallying because of buyers—but because of trapped shorts.
📚 Educational Insight – Why Too Many Shorts Can Be Bullish
In a rally like this, when it feels “too high” and many traders rush to short:
Those shorts are already in the market.
That means they’re now potential buyers—not sellers—because they have to buy to exit their trades.
What happens next?
As price continues higher, stop losses for shorts get hit.
The act of covering those shorts adds to buying pressure.
That drives prices even higher, creating a feedback loop of forced buying.
This is the anatomy of a short squeeze, and it’s a common late-stage development during bear market rallies or strong trend reversals.
📌 Key Levels to Watch Today
✅ Upside Levels:
5704: Key near-term resistance. A breakout above this can lead to:
5742 → 5780s — major magnet zones.
5823: Above here, expect aggressive covering and chase buying.
❌ Downside Levels:
5630–5639: Must hold for bulls to remain in control.
Loss of this zone could open the door back down to:
5585 → 5561 → 5531
📌 Trade Planning & Scenarios
📈 Scenario 1: Clean Breakout & Continuation
If price breaks 5704 and holds on a 5m/30m close,
Expect an extension toward 5742 and 5780s.
Manage risk by using breakout structure for stop placement.
📉 Scenario 2: Failed Breakout & Reversion
If 5704 is rejected and sellers force price back below 5639,
Watch for a push into 5585–5561, which can lead to deeper pullbacks.
📊 Scenario 3: Range Day Chop Between 5639–5704
A hold between key levels suggests consolidation.
Look for fake breakouts followed by reversals, especially around midpoints.
📖 Trader Psychology – Why Most Get Trapped
It’s human nature to:
Want to short what looks “too high”
Buy what looks “too low”
But the market punishes the obvious:
When everyone is shorting a “too high” market, there’s no one left to sell.
And when buyers are afraid to step in at the lows, price reverses violently.
Staying nimble means staying honest.
If your trade idea isn’t working, cut it.
If price is doing something different than you expect, listen to it.
It’s not about being right, it’s about responding well.
🔥 Final Thoughts
Yesterday’s strong close confirmed strength and opened the door for follow-through.
Today’s key inflection: 5704 breakout or 5630 breakdown.
Too many shorts = fuel for the rally.
Stay nimble, manage risk, and be aware: chop can trap just as easily as trend.