December Starts With With A Bang In SPX; Another Leg Up Starting, Or Bull Trap? Dec 4th Plan
Note: This is a re-send of the newsletter for Monday December 4th, originally sent out Friday afternoon, for those who did not receive.
November was the most bullish month of the year rallying +470 points over the course of the month, and this generally coincided with its seasonal average, with November seasonally being the second strongest month on average over the past 50 years. December is also bullish seasonally (though less so) and it started off with a bang today and good move higher.
The “reason” we moved higher today was no surprise, nor coincidence, but rather the function of simple, classical technical analysis (as are all moves the market makes). Namely, ES spent the last week building a bull flag and this got me long heading into today. I wrote yesterday: “I am still holding my runner long from the afternoon failed breakdown and will hold this all day tomorrow”, adding “I consider this week long pattern to be a bull flag with 4550-55 support and 4575 resistance. This breakout would target 4590, 4607-09, then 4620”. This long played out massively today and we got a 50+ point run to 4607-09 target exactly.
We have just broken out a week long base. How far can this run? Or is it a trap? In today’s newsletter I’ll talk this, break down the cause of why we had this rally today (its my favorite setup), then I’ll discuss the actionable trade plan for Monday.