2 Weeks Since The Last Pullback In SPX. How Much Is In The Tank? Dec 4 Plan
The recent rally has been historic in many regards. Not only was November the largest green month of 2024 (which included the largest green week of the year election week), but that was not all. My newsletter yesterday was entitled: “10 days in a row of higher highs in SPX, Can It Manage 11”, referencing the fact that for the last 10 days in a row, ES had cleared its prior days high. This is staggering. The most bullish month, in an already bullish year, concluding with a 10 day rally.
Staggering it may be, but not coincidental, and readers have been positioned for two weeks. Two weeks ago, on November 20th, I spoke about how ES had built a massive two week bull flag with 5988 resistance, writing: “As long as that level[5886] continues to defend….we can work up higher to 5988-93 which is resistance of the bull flag structure that we have built since the election week highs”. On Sunday November 24th, we broke it out and we saw what typically happens after macro bull flag breakouts: Day after day of higher highs.
Last week, ES began building yet another bullish consolidation under the 6035ish level, and we waited in position all week for the breakout. Last Friday, we broke it out. Therefore this week, the mission for bulls would be to defend this breakout, which is why I wrote Friday at 4pm: “Short-term for Monday though, the #1 order of business for bulls will be to hold today’s breakout [6033-35]….This means as long as 6045, 6033 can hold on any back-tests, we simply continue up to 6063, 6072, 6088+”. Yesterday we back-tested 6033-35 exact, rallied to 6063+ target, where we spent most of today basing below and flagging out again.
Are we headed for yet another leg up? In today’s newsletter I’ll talk this, I’ll do a deep dive into the Failed Breakdown (my core setup) on Friday that caused this monster leg up. This is very important because it demonstrates how context factors in to determine the success or failure of any particular Failed Breakdown. Important to know. Finally, I’ll discuss the actionable trade plan for tomorrow.