Market Context and Game Plan – March 25, 2025
Market Context and Game Plan – March 25, 2025
Hey Traders,
Today’s market presents a mixed bag of opportunities, with some interesting dynamics to navigate. Here's what we need to consider:
Overnight Market Action:
The overnight session showed a slow grind up from S3 to R3, coinciding with a retest of yesterday’s high. This suggests that buying momentum is present, but it’s not explosive.
Algo-driven Movements: The gradual upward movement without major volatility could indicate algorithmic buying, pushing the price up without creating sharp price swings. This type of action can make it harder for momentum traders to capture quick, large moves.
Key Technical Levels:
200 SMA (Red Line): Both SPY and NQ are still below their 200 SMAs (red line on the charts). This is a key level to watch as it often acts as significant resistance. While SPY has already retested and bounced off the 200 SMA, NQ is still below it, suggesting we have room for movement before potentially retesting that key level.
Likely Scenario: A retest of the 200 SMA for NQ could be on the horizon. If the market continues to show strength, we might see NQ test its 200 SMA soon, similar to SPY's action. We need to watch how price reacts near this level, as a breakout above could trigger a more aggressive move up, while rejection could lead to a reversal.
Economic Data to Watch:
Today’s Data:
FHFA Housing Price Index (Jan): A modest impact expected.
S&P Case-Shiller Home Price Index (Jan): This could give insight into the housing market's health.
Consumer Confidence (March): A strong indicator of consumer sentiment.
New Home Sales (Feb): A measure of the housing market’s activity and overall economic health.
This Week's Key Data:
GDP Data: This is a major event this week and could significantly impact the market’s sentiment. Any deviation from expectations could cause volatility, especially in sectors sensitive to economic growth.
Market Context:
Slow Price Action: Despite the market grinding up, it has been a slow process with little momentum. The market is moving upward, but at a controlled pace. This makes it difficult for traders who rely on quick momentum.
Potential for Retesting: As mentioned earlier, SPY has already retested its 200 SMA, but NQ is still below. If NQ starts moving up, it might attempt to retest its 200 SMA, offering potential opportunities if the market holds strength.
Key Levels to Watch:
Support Zones:
ES: Watch S3 at 5791.13 for a potential bounce or support zone.
NQ: Look for support around S3 at 20278.15 if the market starts pulling back.
Resistance Zones:
ES: Key resistance at R3 (5827.75) and R4 (5840.725). A breakout above these levels could spark further movement.
NQ: R3 at 20415.319 and R4 at 20420.00 are critical resistance levels to monitor.
Today’s Game Plan:
Bias: The overall bias remains bullish, but the market is moving at a slow pace. Look for small breakouts or retests of key levels, but remain cautious about chasing any sharp moves.
Risk Management: Given the lack of explosive moves, focus on smaller trades and tighter risk management. Be mindful of the 200 SMA as a potential turning point for both SPY and NQ.
Entry Ideas:
Watch for pullbacks into support for a possible entry on higher lows.
Breakout Plays: If the market clears key resistance levels (R3 or R4), this could offer a chance for upside continuation.
Join Our Live Edge Session: If you’re interested in watching how I approach these types of markets live, feel free to check out our live Edge sessions. It’s a great opportunity to see my process in real-time, manage risk, and execute trades based on real-time market context.
Risk Disclaimer
Disclosure:
The information provided in this article is for educational purposes only and should not be considered as financial advice. Trading and investing in financial markets involve substantial risk, and it is important to conduct your own research and consult with a qualified financial professional before making any investment decisions. The author is not responsible for any financial losses or gains that may result from actions
Trading futures, stocks, and options involves significant risk and is not suitable for all investors. This content is for educational purposes only and does not constitute financial advice.