CPI Tomorrow. Expect Volatility In SPX. July 11 Plan.
Back on July 3rd, something very important happened technically: ES broke out a picture perfect, 2 week long bullish triangle at 5585. As I have said all month, for those trading based on “macro”, “the news” and anything else but price, this recent rally may have seemed shocking. For technical analysts though, not only was it not shocking, but it is entirely routine, and expected. I wrote last Tuesday: “5519-5583= the chop zone and it forms a triangle, shown in red below. While we could ping pong this structure more, and there is an infinite number of pathways we could do so, as long as it remains in tact, the path of least resistance is up and it targets 5623+”
While the fact we got to 5623+ target was not shocking at all, what was surprising was how unvolatile the push there was. As readers know, I have been long since last Tuesday July 2nd at 5506, a setup provided explicitly to readers and I have updated this position daily at the close. I trail my stops up via a standardized system where the stop goes under the most recent swing higher low, and this move was was so steep, we simply did not trigger a trailing stop for over a week. Its why I said at the close yesterday: “I am *still* holding my long runner from 5506 last Tuesday (and also the exposure from the 5630 long today) and this is truly extreme (and I cannot recall an example perhaps in my entire 15+ year career where what started as a day trade lasted this long, purely by virtue of the market never dipping enough to take a trailing stop”
I concluded yesterdays newsletter by writing: “As long as 5620 keeps holding (and if bulls are very motivated, 5630 won’t even fail) we can base out 5620-5642 or so, then start on the next leg up to 5647, 5658, 5674+” and by 3pm today, we tagged 5673 target and beyond. This has been an exceptional trade, but ES has something in the cards that could upset it: CPI tomorrow. In today’s newsletter I’ll talk this, I’ll discuss my trailing stop methodology as well as how I use my core setup (failed breakdowns) to add exposure. Finally, I’ll discuss my plan for CPI tomorrow.