CPI Incoming For SPX - Expect Volatility. What Way? March 12 Plan
As readers know, ES has been trapped in one of the most rigid cycles in a few years. Not only has been locked in a strong uptrend all year, but the rally phases of the uptrend has been highly scheduled. I have discussed this for weeks now, but every every single Thursday/Friday for the past six weeks, ES has seen a parabolic rally. For the last three weeks, these rallies all started at the exact same time (overnight Wednesday into Thursday), all going 100+ points respectively.
What has come after this rally? As I wrote Friday: “We have also seen what I have called “Hangover Monday and Tuesday” and ES has typically seen sloppy, corrective price action and typically red days after the late week euphoria”. This started a little bit early this week mid-day Friday, and we continued into today by dipping to start, then chopping around for much of the day before rallying late day. We have also notably put in two red days in a row. A characteristic feature of this current ES cycle is that every single two red day dip since Jan 4th has been bought to new highs (and there has been 7 of them).
Will these two red days get bought like the others? CPI tomorrow will decide. As readers know, CPI days are the most volatile, and challenging of the year (last CPI we sold 66 points in seconds). In todays newsletter I’ll talk this, do a deep dive into the setups that lead to the rally we saw Friday then subsequent ~100 point sell, then provide my strategy for trading CPI days.