Market Update: Tuesday, February 18, 2025

The short week starts off with some chop, but the day closes super strong. Do we continue to break out higher this week?

Disclaimer: These are my learnings and opinions only, not financial advice. If you are newer to trading, please read my Getting Started guide to understand the terminology and tools I use. You can also follow me on X where I share some of my trades in real-time.

Market in Review

Important Update! I created a market update video for the first time (apologies in advance for the audio quality; I’ll fix it next time), and would love to here if you prefer just videos, just writing, or a bit of both. In the video, I go over today’s action, and then review some interesting charts. A much shorter market recap and calendar of events this week are below.

SPX/ES: /ES gapped up over the weekend, and my general sentiment with most gap-ups — especially those over the weekend — is to take profit on a lot of positions at the open. Gaps like to be filled, and it’s rare to have a name gap up, hold, and keep grinding up without ever filling that gap, unless there is news (e.g., earnings).

/ES first dropped to around 6130 (sweet spot bottom), tried to bounce to the 200SMA on the 15min chart (my intraday bull/bear line — light blue line above), got rejected and fell briefly below 6120 towards the 8EMA, and then rallied hard into the close to 6147. In fact, on SPY 0.00%↑ and SPX, we actually hit new all-time highs! As I mentioned in yesterday’s update, “I wouldn’t be surprised to backtest that 6120 level, 6107 (8EMA), or 6093 (20SMA) to form the “handle” of a bullish cup & handle pattern on /ES. You can see the “cup” on the /ES chart below going from January 24 to February 14. Basically, we could see more consolidating before an eventual break higher.” We hit one of those supports today at ~6120 and held (for now).