CPI Delivers The SPX Volatility: Round Two Tomorrow With FOMC. December 14th Plan
I ended yesterdays newsletter by writing: “Size down for the next two days, and I will be trading half sized positions. Trapping, volatility, and high cost of business trading ahead”. Today certainly delivered on all those fronts. I spoke yesterday about just how significant the prior CPI days have been for ES: 125 point sell then 170 point rally in Sept, 205 point rally in October, and today followed suit with an initial 150 point squeezed, then 150 point selloff.
I wrote yesterday when ES was 4020 that “My general lean as of now is I’d like to see 4050 tested tomorrow then on to 4080-90”. We ultimately hit that 4090 right after CPI, shot to 4180, then reversed it all to end up unchanged. While today was certainly volatile, its not over as tomorrow is FOMC day, and both FOMC days as well as the day after are notoriously some of the most volatile days of the year. Traders likely recall last FOMC where we spiked 50 points then sold 150 in one session.
The combination of these events - as I have warned for a week - make this week one of the most complex, most volatile, and most unpredictable of the year. In todays newsletter, I’ll be talking the setup into tomorrow, how I traded today’s extreme volatility (the good, the bad, and the ugly), and the actionable plan for tomorrow.