Welcome to the second issue of Lines After Dark—a succinct, midweek update to bridge the gap between the longer Sunday letters. These notes are designed to focus on short-term setups and take less than three minutes to read.
To get the most from this note, I recommend starting with the latest Sunday letter.
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A Shift in Stance
At the time of writing— the S&P 500 futures are trading at 5663.
Over the past few weeks, I’ve deliberately avoided bearish positioning—opting instead for patience and preparation to accumulate long exposure should the market take “the most humbling path” back toward the April lows.
This week, I’ve changed my tune.
With the S&P 500 stuck inside the resistance zone and with little follow-through from small caps or growth names, I’ve initiated a tactical short against the index targeting the path towards the April lows.
Part of this decision is headline-driven— the current administration has teased “earth-shattering news” later this week or early next. I’m skeptical. Overpromised events tend to underdeliver—and that mismatch between hype and reality can create downside pressure.
Risk Off Criteria
As of Wednesday’s close, zero risk-off signal remains active.
The S&P 500 is still trading above its short term moving average, 20-day EMA
Breadth close positive— albeit a flat range from April 10
Momentum remains positive but is visibly slowing down
Risk escalates if the index closes below 5520
Small-cap and high-beta indicators continue to underperform, adding a layer of caution and supports the bearish lean.
ARKK remains below 52
IWM remains trapped under the 205–212 zone
Navigating The Near Term
The 5650–5750 zone continues to act as resistance. Price has now stalled here for a full week.
Trading “The Most Humbling Scenario”
As outlined previously, this path involves:
A rally into resistance (check)
A failure to break higher (check)
A sharp rejection and move back toward the April lows (potentially underway)
This setup gains probability if breadth stays negative, momentum continues to fade, and price breaks below the short term moving average (5521)
Trade Plan:
Trade short: S&P 500 5650-5750 range
Target 1: 5250 (~7% decline)
Target 2: 5050 (~10% decline)
If reached, I will resume to establish long exposure
If price closes above 5767 (2.5% risk), the trade thesis weakens and should be reevaluated
Summary
There are no major changes from Sunday’s broader outlook.
The S&P 500 remains pinned inside resistance.
Small caps and risk barometers continue to stall.
And with a news-sensitive market staring down an over-hyped policy announcement, I’ve positioned short—looking for a retest of the April lows.
For another week: 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.