After A Rare 6 Green Days In A Row, Can SPX Pull Back? Jan 25 Plan

My newsletter at 4pm yesterday was entitled: “We Have Broken Out Yet Again, What Is The Next Upside Target?” and break out it was. We rallied another 60 points overnight and into this morning. This rally 100 point from Friday should come as no surprise because on Friday ES broke out a 1 month long bullish inverse head and shoulders pattern. Charting 101: A strong squeeze after this is not an anomaly - but the expected outcome.

This rally did not occur just on Friday and we have been running for a full week now. As readers know, I have been in my longest held trade in many months, holding long since 4761 on Wednesday, and I was long at the close yesterday, writing as trailing stops had *still* yet to trigger: “I am, incredibly, still holding my long from Wednesday at 4761”. I concluded my newsletter yesterday by writing: “My general lean is - as always - to defer to the trend until proven otherwise… This means as long as 4887-90 keeps holding, we can test 4907-09, then head to 4925-28”. Today we saw exactly this and we got to right to 4928, poked a little above, and finally, after 6 days, dipped.

After 6 green days in a row, ES finally put in a dip late day today, and in doing so trailing stopped out my runner from last Wednesday concluding a 148 point, 1 week long. Can bears manage some correction now? In today’s newsletter I’ll talk this, I’ll then go over the setup that caused last nights/today’s squeeze. I’ll conclude by discussing the actionable trade plan for tomorrow.