Are ATHs Coming Next Week For SPX? Not So Fast. Sept 16 Plan
NOTE: This is a resend of the newsletter for Monday September 16th, originally sent out on Friday at 4pm, for those who did not receive.
Things can change rapidly in the course of a week. One week ago, my newsletter was entitled: “SPX Finally Snaps Its 4 Green Week In A Row Streak. Buyable Dip, or More Red Ahead?”. Last Friday, we flushed to 5393 in the final minutes of trading, concluding an open-to-close day of selling. As I’ve discussed at length though, ES has a tendency - moreso than tany other market - to short squeeze. For every “elevator down” selloff, there is an equally powerful and often more vicious short squeeze loading. It always comes, it is just a matter of determining when.
I warned about this in my last Friday newsletter (when we were 5400), writing: “Obviously a short squeeze is around the corner”, and “Remember that when ES short squeezes - it is violent. We could recover this entire selloff in a day or two easily if ES really wants, just like we did at August lows”. This came almost immediately, and we started the week with a squeeze to 5500. After CPI day on Wednesday, we saw another “elevator down” move and like all elevator down moves, that lead to another vicious short squeeze and phase of buy the dips. I wrote in my Wednesday 4pm newsletter: “My general lean is to defer to the trend. As long as 5543-37 holds, we can run to 5585-93.” We saw exactly this Thursday and Thursday morning we dipped to 5437-43 exactly, rallied 40 points to 5585-93 target and closed just above.
I then wrote in yesterdays newsletter at 4pm: “My general lean is always to defer to the trend. As long as 5585 holds (or recovers quickly on any flushes) we simply continue up, with the next leg targeting 5619, 5630, then 5660-64 as a stretch target”. By 10am this morning, we were at 5630. This week featured 4 green days in a row, with one of them on Wednesday being the 3rd largest range green day since the Bull Market began in 2022.
Can it continue? Next week has heavy catalysts again, in particular FOMC. In todays newsletter I’ll talk this, I’ll do a further deep dive into the concept of short squeezes and specifically, how to determine when they start and when they end. Finally, I’ll discuss the actionable trade plan for Monday