5 Green Weeks In A Row For SPX. Pullback Time, Or More Upside Ahead? Oct 14 Plan
NOTE: This is a resend of the newsletter for Monday October 14th, originally sent out on Friday at 4pm, for those who did not receive.
The second trading week of October is in the books, and if there was two words to describe this week it would be two of my favorite words: Bull Flag. I want to share what I wrote one week ago exactly in last Fridays newsletter: “Generally, I see 5805 to 5740 as being a massive consolidation range from here (bull flag). This could very easily fill out more - even for days so do not be shocked if we retrace all the way to support again Monday”.
We spent all last week and early this week building out a large bull flag from 5734-40 (it was a murky zone) to 5805. Last Friday, I was looking for this flag to fill out to support with a selloff, and we start this week exactly this way, selling right from Sundays open at 5805ish down to support 5740-30.
From there? I was looking for ES to do what flags usually do. Fill back out to the upside, then breakout. I wrote in Monday’s 4pm newsletter: “Bull case tomorrow: No change. 5734 to 5805 is a large consolidation, and this consolidation is a bull flag. The bull case is that we just work this back up to the upside. This would mean pop back to 5786-88, possible dip there, then tackle bull flag resistance 5805. If this flag breaks out, we see a new ATH to 5846”.
We bottomed at 630PM on Monday. By Tuesdays close, we hit 5805 bull flag resistance. Then Wednesday, we broke out the bull flag and ran to 5846 target *exactly*. Since Wednesday, ES has built *another bull flag*, this time, 5811 to 5840 or so. I concluded my newsletter yesterday by writing:
“My general lean is always to defer to the trend. 5809-11 to 5840 is a new consolidation (bull flag), with a 5828 mid-pivot. As long as this structure is in tact, we can break higher to 5845, 5858-60, then 5890”. This played out to perfection today, and we tagged 5860 by 10am.
After 5 green weeks in a row, how much do bulls have in the tank? In today’s newsletter I’ll talk this, I’ll do a deep dive into my 3 entries this week which were all provided to readers in advance which got me and kept me long for this entire rally. Each represents a different variant of my core setup: The Failed Breakdown. Finally, I’ll discuss the actionable trade plan for Monday.