CPI Day Tomorrow - Expect Major Volatility in SPX. But What Way? August 10th Plan
After the entire of month of July which was essentially one directional “grind up” in ES with every mini-dip bought, August has certainly delivered on a seasonal change of character. As discussed previously, while August is a bearish month to start, on the whole it is a volatile range trading month posting +0.1% average return over the past 20 years, and green 60% of years.
What have we seen the last week? Massive, bi-directional swings and as I warned Monday “expect bi-directional action”. Since Friday alone, ES made the round trip from the 4535+ zone down to the 4480-90 zone four full times. As readers know, I was long yesterday at the close from 4513, looking for a rally to 4532 then dip, and we clipped that target then flushed all the way back to that 4480-90 battleground zone from Friday, and held. As I discussed extensively, 4493-88 the single most important area in ES, as it back-tests the zone we broke out from on July 12th, triggering a 3 week rally.
Today, we tested it *yet again* today, but the real final confirmation comes tomorrow, because tomorrow, is CPI day. These are the most volatile, difficult days of the year. In today’s newsletter, I’ll be talking how I trade CPI days, doing a deep dive into another variation of my core setup - the failed breakdown - and how it produced yesterdays 53 point squeeze, then discuss the actionable trade plan for tomorrow.