Bearish Seasonality for SPX Starts With A Bang; Can It Continue? September 14th Plan

In my last newsletter last Wednesday, I spoke about how ES was building a large, bullish falling wedge pattern from the August high to the June low (shown in the chart below). On Thursday last week, we broke it out, triggering a 150 point melt-up. Today, this abruptly came to an end with CPI being the catalyst, and its no coincidence on the timing, occurring right around the mid-September mark where seasonality flips bearish (last 4 Septembers in a row all saw 5-20% selloffs).

This triggered what is familiar for those trading since January this year; as we have had *at least* one of these days per month (the last being August 26th): A one way, 100+ point “knife catch day”. This is where every support level either melts through direct or bases for an hour then drops, and every micro dip is sold.

This will of course end as every similar melt-down does - with a violent bear market bounce/short squeeze. In today’s newsletter, I’ll be talking a little about how I trade these melt-down markets, talk what the triggers are for short-squeezes/what bottoms look like, then talk the path I see ahead and plan for tomorrow.