Hey traders,
We are coming off a week that essentially redefined the term breakout. With the Nasdaq and S&P 500 hitting fresh all-time highs, it is easy to get swept up in the euphoria.
The primary driver was obviously Nvidia. Their massive earnings beat and the announcement of a 10-for-1 stock split have injected a fresh dose of adrenaline into the AI sector.
However, when you look beneath the surface of these record numbers, things get interesting for those of us who trade using mathematical precision rather than hype.
Right now, the Drift % on several major tickers is reaching extreme levels. In the Gravity Zone system, we track how far the price has stretched away from the White Dotted Gravity Line.
Think of that gravity line like a rubber band. The further the price drifts into the Blue Sky Zone without a breather, the more likely we are to see a sharp snap back to the mean.
We are seeing this exact setup forming in the S&P 500 right now. While the trend is undeniably bullish, the VIX is sitting at multi-year lows, suggesting a high level of market complacency.
For next week, my eyes are on the Grey Dotted Lines, which act as our algorithmic profit targets and resistance levels. If we cannot hold these levels, the first stop is a return to that central gravity line.
The professional way to play this is not to chase the top. It is to wait for the indicator to flash a teal entry signal after a proper consolidation. You can see exactly how these levels are calculated here before Monday's opening bell.
We also have the PCE inflation data coming late next week. This is the Federal Reserve's preferred metric, and it will likely determine if the current rally has the legs to continue through June.
Fed officials like Christopher Waller have already stated they need several more months of cooling data before they even consider a rate cut. This creates a ceiling for the market that most retail traders are ignoring.
My plan for Monday is simple: I am watching the Profile Depth on the intraday charts. I want to see if the volume supports this new high or if we are looking at a classic trap for late buyers.
If you want to move away from emotional trading and start using the same zones the institutional algorithms use to trigger their entries, now is the time to get the Gravity Zone on your charts.
Click here to lock in your access and trade with algorithmic clarity starting next week.
Best,
Ben
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