Bears Win FOMC Day in SPX; Is It A Trap? September 21st Plan

As readers recall, something very important happened in ES yesterday from a technical analysis perspective: I was short yesterday for a move into the ~4467 zone where I was looking for a bounce/recovery, and we got one right on cue, and it was because we tested support of the only pattern that matters in ES: A 2 month triangle. I wrote yesterday: “Bulls put in the test today, and now its make or break, and today’s low was the shot”. We got a 45+ point squeeze off it. The job today, for bulls, was to defend it.

Today, was FOMC day and it delivered the typical trapping and volatility, I wrote yesterday: “These are the most volatile, trap-filled, unpredictable, difficult to trade days of the year”..adding “A core feature of CPI and FOMC days is traps. Frequently, the first move after the release is a trap, and very usually, the second is as well”. The above descriptions certainly applied today and we intense, bi-directional trapping right after the release. I wrote extensively yesterday how to exploit this to profit, rather than end up as liquidity for algos.

After it was all said and done though, where did ES finish? Below support of that key triangle structure at 4470. What does this mean now? As readers know, the day after FOMC is often just as full of surprises as FOMC day. In today’s newsletter, I’ll talk what’s next, breakdown my short yesterday in detail, and provide the actionable trade plan for tomorrow.