Lines After Dark
Navigating 5650
Welcome to the Wednesday edition of the Substack—tentatively titled Lines After Dark.
This midweek note is meant to provide a brief market update between the longer Sunday letters. These updates will be succinct, focused on shorter time frames, and written to be read in under 3 minutes.
To get the most from this note, I recommend starting with the latest Sunday letter.
Throughout May, the Wednesday note will remain free to all subscribers. In June, it will move behind the paywall and be available to supporting members only.
At the time of writing— S&P 500 futures are trading 5619.
Risk Off Criteria
Markets closed Wednesday with one active risk-off signal: market breadth.
Despite the S&P 500 staging a strong intraday rally from a weak open, more stocks made new lows than new highs. Momentum continues to mean-revert after its prior extreme, and the index remains above its short-term moving average (20-day EMA).
Navigating The Near Term
The S&P 500 is currently wedged between the short-term and medium-term moving averages. While it may continue grinding higher, price is now pressing into a significant resistance block around 5650—a level that previously served as support throughout March and marked the breakdown zone in early April.
This 5650–5750 zone is my area of interest for potential rejection.
The scenario that remains top of mind: The one that humbles most participants.
I’m looking for rejection in the 5650-5750 zone, followed by a retest towards recent lows. This intermediate bearish outlook loses traction if price closes above 5767.
Summary
There are no major changes from Sunday’s broader outlook.
Yes—the S&P 500 and Nasdaq both closed strong.
But take note: IWM (the traditional small-cap signal) and ARKK (the modern risk barometer) both failed to close green.
Stay sharp.
We’re still in the chop zone.
Disclaimer: The information in this article is for informational purposes only and should not be considered financial advice or a recommendation for any investment. I am not a financial advisor, and the content is not intended to serve as financial advice. It is solely intended to journal thought, ignite more thought and discussion.