8 Green Days In A Row For SPX. Will It Run Out Of Steam Before July 4th? July 3/4 Plan
We headed into today (the final session before two days of holiday trading) on the back of an incredible 8 green days in a row for ES. While those trading based on “news”, or “macro” or any of the various other things that have 0 to do with price action may be surprised by this run, technical analysts and those following the newsletter weren’t. This is because it was the totally predictable outcome of a simple fact that I’ve discussed daily for weeks: On Monday June 23rd: ES broke out of a two week bullish triangle with support at 5979 and resistance now down at 6051. What happens when a two week chart pattern breaks out? Most commonly, two weeks of rally. I provided this setup way back on Friday June 20th at 4pm, when we were 6020, by stating: “My general lean is always to defer to the trend, until it ends. 5978-82 to 6081= a range (descending triangle) with 6050 a key magnet inside. My lean is we work back up to 6050, then 6081. Above there, we can try breakout to 6099, 6124, 6143+”
As readers know, the initial trigger for this long was back on Sunday June 22nd, via my core setup: The Failed Breakdown. Remember my edge mirrors insitutional accumulation patterns and institutions long when bearish news hits (US bombing Iran in this case), price flushes a low, providing access to a large liquidity pool for institutions beneath the low (trapped shorts). From there, they buy, I follow, and up we go. This lead to a long that lasted for over a week (thanks to my trailing stop never hitting), something I’ve verified at the close each day including yesterday by stating: “I am still holding my 10% long runner from the Sunday June 22nd 5979 Failed Breakdown and this is getting a little absurd at this point with this runner now staying alive for 7 full trading days and 290 points, as ES simply has not seen a dip large enough yet (taken out the prior days low) to exit it.
After this much upside though, it was time for ES to cool off and consolidate to start this week and form a new chart pattern. I expanded on this at the close Monday/yesterday stating: “My general lean is always to defer to the trend until it ends. I’ve been doing this for the last 1200+ points since the April low, and we never fight the trend or “try to be first” into a reversal. 6227-32 to 6250=a flag. This sets up 6271, 6280, then ATHs to 6315, 6320-25.” We got started on exactly this yesterday and today. We held 6227-32 support exact in the morning yesterday 2x, popped to 6271+ today.
We are now heading into two days of Holiday Trading and as I explained all week, July 4th week is one of the stronger of the year, green 80% of the last 10 years with 2x the avg weekly return. Can we grind up for two more days? In today’s newsletter I’ll talk this, I’ll do a very deep dive into exactly how my trailing stop/runner methodology works, which kept me long since June 22nd. Finally, I’ll discuss the plan for tomorrow/Friday.