*13 Days* Of Basing For SPX. Huge Move Ahead. Can Earnings Trigger It? Oct 31 Plan
Every newsletter for the past couple weeks, I have begun by talking about what Mode ES is in. That is to say who controls, and where does it switch? (is it buy dips mode with bulls controlling? or sell bounces mode, with bears controlling?); and what is price doing? (is it rangebound, or trending). If you can answer these two questions everything else falls into place perfectly, and you know exactly what type of trades to take and where. For the past two weeks, I have stated the answer clearly: We have been in buy dips mode, and we have been rangebound, largely between 5830s and 5895-5900. Buy dips mode does not change until the range fails.
Knowing we are in buy dips mode has made trading the last two weeks straight-forward. Everyday, we get a dip - typically to the bottom of the range - and it sets up a long, often to the top of the range. Friday, we rallied to 5902 and sold to 5830s into the close. What happened? The dip was bought, we gapped up Sunday, and we rallied to 5880s Monday. Yesterday, we sold back to range support to fill that Sunday opening opening gap. What happened from there? The dip was bought. I wrote in my Monday 4pm newsletter: As long as ES can hold 5843 ideally tomorrow on any dips (fill the Sunday gap), ES can just push back up the range to 5882, 5892, then ~5900”. We saw exactly this and we dipped a little under 5843 yesterday, filled the Sunday opening gap, and were off to the races. Last evening, we tagged 5892.
From there, we sold into this morning. What happened to this mornings dip? You guessed it: It was bought. I was looking for this price action action today, and I wrote in 4pm newsletter yesterday: “My general lean is we can run to 5896 flag resistance, perhaps dip again there to fill out the range again, then try a breakout to 5915+.” We ran to range resistance, sold this morning to 5840s, and then popped.
We are ultimately still stuck in the range though, with heavy earnings incoming today and tomorrow. Will it break, and what way? In today’s newsletter I’ll talk this, I’ll do a deep dive into yesterdays long setup which produces a 50 point rally (Hint: It was caused by my core setup, the Failed Breakdown). Finally, I’ll discuss the actionable trade plan for tomorrow, as we continue to play out earnings season. We had Google yesterday, Meta today, and the big ones: Apple and Amazon, tomorrow.