Explosive Rally For SPX. Is It A New Leg Up, Or A Blowoff Top? July 8 Plan
NOTE: This is a resend of the newsletter for Monday July 8th, originally sent out on Friday at 4pm, for those who did not receive.
My last newsletter was entitled: “Is SPX About To Start A Fresh Leg Into ATHs? July 4th/5th Plan”, and the answer was “yes”.
Back on Tuesday morning - as provided to readers- longs were triggered at 5506 and this resulted in my best trade of 2024, lasting for 120+ points into today. It was yet another demonstration of just how powerful classical technicals are to cut through the endless barrage of noise out there (as a rule, if its not on your price chart, its noise). Starting a week ago, ES formed a bullish triangle pattern, with resistance at 5582, making that the magnet. I established this last Friday, by writing: “ES is now building out a new structure, and I’d consider it to be a triangle. This structure encompasses all the action for the last week and has resistance way up at 5582”. I wrote on Monday at 4pm: “As long as that triangle remains in tact bulls remain in control, simple as that. The trend is up, and we must assume all patterns will continue in the direction of the trend until proven otherwise”. We got to 5582 triangle Wednesday, and broke it out.
Of course though, we never just long because we see a chart pattern. We need an entry trigger, and for those, I resort to my core setup: The failed breakdown. I wrote Monday at 4pm: “One could try the failed breakdown of today’s low 5506”. This gave us our entry and Tuesday morning, we saw this exact setup, triggering longs and resulting in a 105+ point move higher until today. I concluded my last newsletter Wednesday 4pm with: “I am currently riding my long runner from 5506 with the 5563 add…..My general lean is always to defer to the trend. As long as above 5578-82, we can base out, then work to 5603, 5615, then 5624”. This could not have played out better, and we hit 5624 into the close exactly.
Is this it for the rally? It may be time for caution finally. In today’s newsletter I’ll talk this, I’ll discuss how the 3 components of my system worked together to produce this weeks 90 point long (failed breakdown entry, trailing stop methodology, adding to runners). We will see hundreds more setups just like this, this year. Finally, I’ll talk the actionable trade plan for Monday.