CPI Day Incoming For SPX: Expect Volatility. Are Bulls Done? Feb 13 Plan
Today started off with yet another squeeze higher in ES (that reversed late day), and we officially made it +230 points from the trigger that started it all: The breakout on January 19th of a textbook, month-long bullish inverse head and shoulders pattern at 4830. I have stated literally almost every day since then that the market would be in “buy all dips” mode, and since that trigger we only put in 4 red days, all of which were bought. One of those red days, was today.
I was holding long over the weekend as readers recall, writing on Friday: “I am holding my 10% long runner from 5018 over the weekend”. My plan for the day was to wait for another intraday bull flag to form, for a likely further push up, and I added on Friday: “My lean is, as always, to defer to the trend until it ends. As long as 5040 holds, we can test 5054, 5065-70”. Today, this played out to perfection and we held 5040 overnight/this morning, and got that rally to 5065-70 target with 5066 high of day before a hard rejection lower.
Tomorrow, is CPI day, and these are notoriously the most volatile, significant days of the year. After 4 green days in a row, ES finally put in a red day today. Are we finally looking at a pullback? And how will I trade it? In today’s newsletter I’ll talk this, I’ll do a deep dive into the setup that got me long on Friday (its my secondary entry setup: The back-test). Finally, I’ll discuss my system for trading CPI days.