Bullish Weekly Hammer Candle In SPX. Can It Follow Through? August 12 Plan

This week has been one for the record books. The week started off with a mini-Black Monday crash, where ES put in largest red day since September 2022, capping off the largest three day sell cycle since the March 2022 Covid Crash. Things did not settle there though, and ES spent the subsequent 4 days in such a heightened state of volatility that 100-150 point moves were the daily norm (when it would usually be something like 20-30 points) - we saw one every day essentially.

Then of course, the market could not put in its biggest red day since 2022, without also matching with its largest green day since 2022, and yesterday, ES put in its biggest green day since November 2022. I was positioned for this since Wednesday evening and into today as readers know, writing on Wednesday at 4pm: “My general lean would probably be we can perhaps dip more down to 5185-90, then take another trip back to 5338-42 again”. This 5338-42 was the battleground all week. We sold from here Sunday evening to trigger the Black Sunday/Monday sell, we backtested it Tuesday, Wednesday, then burst through today

I wrote yesterday: “The “ultra bull case” for tomorrow would see ES continue to defend that 5338-42 level now (or if it does fail, quickly flush to something like 5328 and reclaim), and begin working up towards the next major backtest magnet which is now 5438. There are big resistances en route like 5378”. We got to 5378 by 2pm today. After all this, ES closed the week green, putting in a large weekly hammer candle. Is that the low? In todays newsletter I’ll talk this, I’ll discuss the setup that got me long on Wednesday evening in more detail. I’ll then discuss the actionable trade plan for Monday.