Big Earnings Incoming. Will SPX Break Its Range? Oct 30th Plan
As I frequently discuss in this newsletter, knowing who controls in markets (bulls or bears), and where that control switches is 90% of the battle. Everything else traders like to talk about - entries, levels, etc is secondary. Every single day in this newsletter, I talk about who controls, and where it switches. If you know this, you know you should be overwhelmingly or 100% long only above certain levels, and short only below certain levels. I call bull control “buy dips mode” and as I’ve discussed daily, thats been the mode we’ve been in since the September 6th low.
ES has had a variety of dips in this time period but the common theme is that they are all bought, and almost always - within a day. The last major dip before today was Friday morning where we sold from 5902 down to 5836 low of day of 2pm Friday. What happened there? No shock, the dip was bought to 5885 yesterday, and that Friday low held all week until today. This long was provided to readers on Thursday at 4pm where I wrote: “For tomorrow 5842 is first down. If we can dip to 5838 then reclaim it I’ll probably try a long again”. After this rally to 5885 yesterday, ES started today off with another dip to ~5838 again
What happened with this dip? It should be no surprise to anyone paying attention by now. It was bought. I provided this dip buy to readers in yesterdays 4pm newsletter, writing: “My general lean is always to defer to the trend. As long as ES can hold 5843 ideally tomorrow on any dips (fill the Sunday gap), ES can just push back up the range to 5882, 5892, then ~5900”. We dipped a little under 5843 this morning, filled the Sunday opening gap, and were off to the races.
Ultimately though, all this dip buying has occurred in the context of a large, two week consolidation largely between ~5900 and 5838-34. Is it ready to break, and what direction? In today’s newsletter I’ll talk this, I’ll do a deep dive into Friday afternoons Failed Breakdown which set the low we saw until today - this was a very classic example of the setup I trade every single day almost and its essential to see quality, real-time examples of it to learn. Finally, I’ll discuss the actionable trade plan for tomorrow.