Day 4 of Chop For SPX, A Breakout Is Close. What Are The Targets? October 18th Plan
Yesterday, my newsletter was entitled “ES is basing for a big move, What Way?”. This continued today. It is important to zoom out out to the big picture context and recall that last week, ES put in a 187 point rally from Oct 6th to last week high. This rally was caused by ES reclaiming its core bull market trendline from October 2022 on Oct 6th.
After this rally, ES has spent the last several days building a large base mostly between 4360 and 4410-20, playing ping pong. Today, I was looking for this base to fill out, and this played out extremely well from yesterdays plan. I concluded my newsletter yesterday by writing the following: “Now its time to base build. My general lean here is that ES can fill out the 4408 to 4366 range ….This would then produce another leg up to 4418, 4439, then 4450+”. We did this today, and we started the day with a dip down to 4366 support almost to the tick (4365.75 low of day), defended, then saw a massive 52 point run to 4418 resistance/target before ES ran out of steam and began ping ponging in range again.
Despite a lucrative run today though, ES has ultimately put in lots of volatility to go nowhere, as we continue to base in that same 4410-20 to 4360s range. This will inevitably result in a large trend move. But what way? In today’s newsletter, I’ll talk this, I’ll then go over the setup that produced the large morning squeezes we had the last two days (this is what I call a back-test entry, and is a critical tool for the toolbox). I’ll then discuss the actionable trade plan for tomorrow.