Election Week Is Underway. Can SPX Bulls Hold The Market Up? Nov 5th Plan
We have a huge week incoming in terms of volatility events: An election tomorrow evening then FOMC on Thursday. Heading into this week, ES broke the cycle it had been in since the September 6th low (whereby selloffs were short-lived and shallow) and put in the largest selloff since September 6th last Thursday, selling 155 points high to low.
Readers were well prepared for this event and everyday in this newsletter I provide the “Bear case short trigger” below which price is likely to unravel. 80% of days given the strong uptrend we are in, this never triggers, but last Wednesday/Thursday it did. I wrote in my last Wednesday newsletter: “Bear case tomorrow: Begins below 5843”. At 6pm last Wednesday, we lost this level, and sold 110 points, for 30+ hours of straight selling to 5730s and we have remained around this support since then where ES has repetetively tried to bounce.
Heading into this week, I was looking for ES to try a relief rally, building on the relief rally attempt we had on Friday. I wrote in my Friday 4pm newsletter: “Bulls havn’t done anything yet to suggest they’ve retaken control other than just survive today, but I still consider the relief bounce to be in tact as long as that 5728-30 zone holds”. This morning around noon, we sold down to ~5728, set the low of day, and rallied 30+ points.
With an election coming up though, can bulls keep up the strength that has characterized this market broadly since September? In today’s newsletter I’ll talk this, I’ll do a deep dive into some of the short setups we had late last week (shorts are rare in this market, we had two quality ones late last week, and I want to devote extra time to them when we get them in preparation for upcoming downtrend legs. You’ll need to know these). Finally, I’ll talk the actionable trade plan for tomorrow’s pre-election day. Most the election day content will come in tomorrow’s 4pm newsletter since the real fireworks will be tomorrow evening into Wednesday.