Breakout In SPX, What Are The Targets For This Leg? Feb 8 Plan
My newsletter yesterday was entitled: “We Have Built A New Pattern In SPX, What Will Way It Break?”. The answer was a bull flag, and today we saw the breakout of that bull flag for yet another leg higher. As readers know, I was long into today’s session in preparation for the push higher, writing yesterday: “I am holding my long runner still from the failed breakdown this morning and will hold as long as today’s lows hold”.
This move yet again shows the power of simple technical analysis to cut through noise. There is more noise than ever today - macro, endless opinions/narrative, endless data, and it is very easy to suffer from “analysis paralysis”. Price cuts through it all and keeps it simple. It was an inverse head and shoulders breakout Jan 19th that initially triggered longs and started “buy all dips mode” as I’ve called it daily, and it was a bull flag the last two days that took us another leg up today. I wrote yesterday: “ES is in the process of building out a bull flag. I consider support of this structure to be 4947 now, and resistance 4970 or so…As long as the flag continues to hold we continue up to 4977, 4990, 5000+”. We broke 4970 overnight, back-tested this morning, then off to 5000+.
This has started a new leg up, but how much does this really have left, and what are the targets for this new leg? In today’s newsletter I’ll talk this, I’ll then do a deep dive into the setup that got me long at 4965 yesterday for this move higher (my core setup, and this was textbook). I’ll then discuss the actionable trade plan for tomorrow.