On 05/04/21 the S&P 500 (SPX) opened at 4170.87 below the battle line discussed in the prior post “Battle Line – May 2021”. That post noted a break below the line could open the door for the SPX to rapidly fall to the 4140 area. This was achieved in the first hour, and shortly afterwards the SPX bottomed at 4128.
The 30- minute chart courtesy Trading View illustrates the intraday action.
In the later part of the trading day the SPX rallied to just below the prior support level. Usually, important prior support levels become resistance. If the battle line stops the price rise on 05/05/21 it would be additional evidence that at least a two-week decline was in progress.
Traders are holding short from the SPX 05/04/21 open at4170.87. Hold short with a stop loss for half the position at 4218.78. Use SPX 4240.00 as a stop loss on the other half of the position.