1st Red Day In 4 For SPX; Another One Incoming? October 13th Plan
Today was CPI day. I wrote yesterday that CPI days were “some of the most volatile, trap-filled, difficult to trade days of the year for ES” and today certainly checked off all those boxes - readers can see why I emphasize these days so much. I added yesterday that “The defining feature of data days is trapping, which is excellent for failed breakdown traders like myself. Often the first and quite often second moves are traps”. This is exactly what we saw today with an initial move down to 4393 (Trap #1 for shorts), squeeze to ~4418 (Trap #2 for longs), then big rejection lower.
Zooming out, as stated yesterday the last week broadly has been about as bullish as a 3-4 day period can get. Not only was last Friday the single largest range green day of 2023, but this was the first of what would be four green days in a row - with the entire rally spanning 187 points from last Fridays low to todays highs and this was the largest 4 day green stretch of 2023 so far. The “cause” for this rally was ES reclaiming its 11 month bull market trendline last Friday at ~4315.
Today, we finally got a red day after this incredible sequence, and the first red day in a week, but the dip was bought late day. Was that it for the pullback, or more ahead? In today’s newsletter I’ll talk this, I’ll then breakdown the setup that caused yesterdays massive squeeze + todays sell, then discuss the actionable trade plan for tomorrow