CPI Day Tomorrow, Expect Volatility In SPX. August 14th Plan

My newsletter yesterday was entitled: “Quietest day in SPX For 3 Weeks. Calm Before The Storm?”. As newsletter readers know, this storm was likely to be a bullish storm, and we saw a massive squeeze today. Remember that compression precedes expansion and coiling days like yesterday, see explosive moves.

I concluded my newsletter yesterday by writing: “My general lean is to continue respecting Friday’s 5338-42 breakout. I see 5338-42 to 5378-82 as being a chop zone, with 5362 a key mid-pivot. As long as the structure holds, we can push to 5393, 5414, 5438-42” Today by noon, we tagged 5438-42 target. It is important to remember why we saw today’s rally. Remember that 5338-42 was where last Sundays market crash originated from. Therefore, by clearing it on Friday, the “gate” was opened for the next move up. My target for this next leg up was 5438-42, 100 points higher. Why 5438-42? Because that was the level we broke down on on August 1st, after days of basing above, and therefore, it becomes the next “magnet” and “gateway” to higher prices.

We made that 100 point move into today. Markets move in a logical, systematic manner, for those who are willing to tune out the “macro” noise and trade price. But now, we have CPI tomorrow. Will CPI ruin the rally? In today’s newsletter I’ll talk this, I’ll talk the setup that got me long back on Friday for this move (as readers know, I’ve been in the same long since Friday morning). Finally, I’ll discuss the actionable trade plan for tomorrow.