Lines After Dark
Navigating 5850
Welcome to the fourth issue of Lines After Dark—a succinct, midweek update bridging the gap between the longer Sunday letters. These notes focus on short-term setups and are designed to be read in under three minutes.
To get the most out of this update, I recommend starting with the most recent Sunday letter. That issue introduced a shift in strategy: the current outlook favors a constructive advance toward all-time highs. This will remain the primary scenario unless all three risk-off criteria align to trigger what would be the second alarm of 2025.
Programming Note: Reader Updates
This issue—and next week’s—will remain free as promised for the month of May. Starting in June, Lines After Dark will move behind the paywall and be available to supporting subscribers only.
Thanks to all of you, this midweek edition has quickly become one of the most-read notes I publish—earning a spot at #39 Rising in Finance. I’m grateful for the readership and momentum.
Also in June, the subscription price will increase from $22 to $28/month. Current subscribers will retain their existing rate. If you’ve been considering upgrading, now is the time to lock in the lower price.
Risk Off Criteria Check
As of Wednesday’s close, zero risk-off signals are active.
Trend: The S&P 500 remains above its short-term moving average (20-day EMA), even after the first meaningful decline in nearly a month.
Breadth: Closed positive, continuing to oscillate in a relatively flat range dating back to April 10.
Momentum: The “elastic band” is back in play—recent extremes are unwinding as trend normalizes.
Risk escalates with a close below 5745
All-time highs become probable with closes above 5940
The small-cap segment ended Wednesday with mixed signals:
ARKK remains above the key 52 level
IWM dropped below the 205 breakout line but is still trading above its short-term moving average
Key Levels in Focus: 5940 and 5745
These levels have been revised from last week’s 5930 and 5630 to reflect updated structure.
5940 represents 5% above the long-term moving average—a key zone where, based on my study, price tends to transition into a position favorable for new all-time highs. While pullbacks remain likely, I view them as the shop zone
5745 is now the updated short-term moving average and remains one of the risk-off criteria. This level should act as support in a healthy uptrend. A breakdown—especially if breadth and momentum falter at the same time—would shift the primary scenario away from new highs.
Currently, price is trading in the gray zone between these levels. Considering the speed of the recent rally, a corrective pullback here would be both healthy and expected.
Summary
The revised outlook favors a market advancing toward new all-time highs—as long as the three risk-off criteria do not simultaneously trigger.
If price pulls back toward the short-term moving average (and the “highlighter distance” below it), I intend to accumulate long exposure in that zone. It’s a well-risk-managed area given its proximity to one of the risk-off triggers.
Small caps continue to offer moderate confirmation of this move. Holding ARKK above 52 and IWM above 205 remain key near-term markers.
Next Sunday wraps up the month, and with that comes a full update on all active trade ideas.
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.