6 Days Of Upside For SPX. How Much Gas Does It Have Left? Jan 22nd Plan
This last 1.5 weeks was very kind to both technical traders, and bulls and as readers know (updated daily at the close) I had been in the same continuuous long since last Tuesday at 5845-50. The reason is because last Monday - after 4 of the last 5 weeks red - ES did something very important. It tested support of a massive, two month long “megaphone” pattern at 5810. As per charting 101, patterns tend to fill out, and if megaphone support defended at 5810, price would at least try to gun for megaphone resistance (which is much higher) in the 6250s. We began that trek.
Its why I wrote last Tuesday at 4pm (when we were 5880s): “My general lean is that a relief bounce leg began on Monday by testing megaphone support, and is underway. This would target 5934-36, 5965, then 5996/6004 if bulls really want to move”. By last Thursday, we had tagged 6004 and spent the day bull flagging (yet another chart pattern) below. 6004 was a major support shelf on January 6th/7th, which broke down and turned resistance.
I was looking for this to break and I wrote last Thursday at 4pm: “For tomorrow, the bull case is that ES is constructing a bull flag. Bulls will want to recover this afternoons 5974 low to trigger longs, and this would be an entry I’d be tracking….That will need to clear to start the next leg up which would target 6016, then 6033+”. By Friday, we got 6033+
Putting a green week in is one thing, the other is maintain it. My last newsletter was entitled: A Big Green Week For SPX. Now The Big Question. Can It Sustain? for this reason. As readers know, my lean was yes, and I wrote on Friday at 4pm: “If I had to provide a lean though, its always to defer to momentum: As long bulls can hold 6005 lowest we can 6066, 6074, then 6087.” This played to perfection, and by today, we got to that 6087 target.
Its been 6 days of now upside in ES with bulls broadly in control. We’ve had dips, but they are bought. Can it continue? In today’s newsletter I’ll talk this, I’ll do a deep dive into a very classic Failed Breakdown (my core setup) we had on last day Thursday which triggered Friday’s squeeze. This one is a great template for learning and we see these all the time. Finally, I’ll discuss the actionable trade plan for Wednesday.