Can SPX Bulls Keep The Rally Going Through FOMC? June 14th Plan

As always today’s CPI was not boring and after an initial flush right after the report, we got a fantastic 40 point upside squeeze. In my newsletter yesterday I wrote the following: “These days are characterized by traps, so wait for the trap first to enter and don’t get victimized by it. I am generally watching for a support to flush then recover for longs”.

This is precisely what happened and as usual with CPI, the first move was a trap and we immediately flushed down to 4380 support, recovered, then began the squeeze up. I wrote yesterday: “On a regular day though, I’d be looking for something like bull flag/back-test 4366, then head on up to 4405, dip again, then onto 4426-30”. We tested ~4405 overnight, dipped, then squeezed to 4423 before running out of steam.

As I discussed extensively, on June 1st ES broke out, beginning a substantial leg up and “buy all dips phase” and we are now up 140 points since then. Tomorrow however, is FOMC day and while today’s CPI was fairly clean, traders may not be so lucky with FOMC tomorrow. In today’s newsletter, I’ll answer the question of “when is the top?”, I’ll discuss my core setup (the failed breakdown) which triggered longs yet again today, then I’ll provide the actionable trade plan for tomorrow.