31 March 2026 - ES & SPY
Core idea remains: short at pullbacks.
Yesterday's Review
The market did not manage to retrace to the main sell level, but the indicated bullish reference was support for more that 2 short term trades, and eventually after its compromise was an excellent entry from the main short scenario to be accessed. Target 1 met.
Current Regime
No change from yesterday, with minor differences in levels: The big picture remains clearly bearish, with 3 main zones to sell. Failure of a zone to hold creates a short-term rotational environment. CAUTION: Although short bias remains below the 6700 area, Friday showed an excessively short market and that elevates the probability of aggressive short covering rallies.
Levels
Scenarios
Main Scenario — Bearish
Short with entry point at sell levels, focus on 6510 - 6520.
Alternative Scenario 1 — Rotational
Intraday rotational between failed sell levels. This is a scenario complemented by shorter term mean reversion trades / scalps at the edges of ranges. This could be a situation like yesterday before the break of the 6418 area.
Alternative Scenario 2 — Bullish
Failure of multiple sell levels to hold puts the market in a short covering rally, which may test the overall short bias. Access this bias buying pullbacks at failed sell levels, after they have cleanly been compromised.
Important Notes
Execution — Sell and buy levels are not automatic entries. Traders must use their own short-term tools — orderflow, technical indicators, or otherwise — to confirm and time execution. If at the time of reading the market is trading above a sell level, that level's bearish bias is void, and vice versa.
Level Integrity — Levels are invalidated by acceptance beyond them, not a few ticks through. A wick through a level that reverses is rejection, not invalidation.
Timing — This note is prepared pre-market. Intraday developments may alter the relevance of any scenario.
Definitions
Price acceptance — Price spends significant time and generates high volume above or below a level, establishing a market consensus that it is a fair trade location.
Price rejection — Price fails to spend significant time or generate high volume at a level, showing a lack of market consensus that it is a fair trade location.
Rotational market — Price oscillates within the range of an accepted value area regardless of timeframe or extent, effectively rejecting trade outside that range to maintain the established consensus.
Buy/Sell levels — Price ranges where increased participation is expected and risk/reward is maximised, provided the level maintains its integrity.
Bullish/Bearish refs — References expected to provide buy/sell side action, without being important enough to support a regime.
Targets — Price levels representing the partial or full conclusion of a move, where profit-taking may trigger a counter-reaction without being treated as an expected trend reversal location.