CPI Incoming - Expect SPX Volatility. December 13th Plan
In my last newsletter, I wrote: “My general lean though is unchanged and that as long as 3955-60 (3920 lowest of we sell more into Monday) holds, I’d like to see return to 3990-95, 4015+”. This played out perfectly - Last night futures opened, we tested 3955-60, and rallied to 3990-95 then 4015 where we closed the day. Ultimately though, todays action is fairly irrelevant, given that tomorrow is CPI day.
It is important not to understate just how important CPI days have been. As posted on Twitter earlier - the largest days of each of the last 3 months were CPI days. Each saw 150-250 point single day moves, nearly all involved massive traps 1st, and in the case of Octobers CPI, it produced one of the largest intraday reversals in the in SPX history, selling ~140 points then rallying 170+. This was also the October bottom. In other words, these days have not only been massive, but also technically significant.
These news driven days are fundamentally impossible to predict in advance in terms of price, but there are important clues. In today’s newsletter, I’ll be talking how I trade these days, the big picture pattern, and the actionable plan for tomorrow.