Biggest Green Week For SPX Since June, Another One Incoming? Oct 24th Plan
Bulls did exactly what they had to do in ES on Friday, putting in a major reversal day and the largest green week since the June lows (which kicked off an 8 week bear market rally). In my last newsletter published when ES was 3674, I wrote: “My general lean is that the October rally has room to run to 3800+ at least, but whether it occurs “direct” depends on 3680 reclaiming”. This played out nicely, and shortly after the open Friday, 3680 reclaimed and triggered a 90 point, one directional trend day as we ran towards 3800 target.
For several weeks, I had been talking about the “October rally”. This refers to the fact over the past 70 years, October is the 4th strongest month of the year on average, and during mid-term years in particular it is the strongest. This is certainly tracking, with October *so far* being one of the rare green months this year.
October still has room to go, but can bulls put in a rare green follow through week? In today’s newsletter, I’ll be talking my two core trading patterns: the failed breakdown setup & flags (with illustrations) and how they both played a key role in Friday’s rally. I’ll then discuss my big picture targets for this leg, and how I plan on trading it on Monday.