A New, Key Multi-Week Pattern Has Formed For SPX: October 25th Plan

Back on October 13th, I spoke about how ES had put in a classic bottoming setup (failed breakdown of the October 2nd low and recovery) for a fresh bear market rally leg. Since then the follow through has been good, up 300 points off the lows as ES temporarily transferred from “sell the bounce” as the default mode back to “buy the dip”.

In my newsletter Friday, I discussed how I was running a long position from 3694ish stating “I am just running my long here and will probably hold this for several days now risk free” and “I generally think we continue pushing higher here to 3805, 3820+ but we are now quite overbought, and I don’t expect as clean a day on Monday”. Today certainly wasn’t as clean to started, but we followed through nicely.

ES has built a significant new pattern on the daily chart. While there is certainly setup for more bear market run, it is important to note that with FOMC *and* mid-term elections next week traders must be prepared for anything. In todays newsletter, I’ll talk the pattern forming, how to trade messy days like earlier today, then targets.