FOMC *and* CPI Tomorrow. Volatility Incoming For SPX. June 12 Plan
Tomorrow will be a very unique session, as we have arguably the two most significant catalysts for ES (CPI and FOMC) compacted into this single session. Last Wednesday, ES broke out a textbook bull flag that I had prepared readers for all week at 5302, taking us to 5370s by Thursday. Since then, the market spent the week building a base, and it has been doing so for two reasons. 1) It has to rest after the monster rally and 2) It’s waiting for tomorrow.
I warned readers about this on Sunday, when I wrote: “Markets will be waiting for CPI/FOMC day on Wednesday and its all going to be noise until then. As long as 5342 can hold on dips, we can fillout the 5342-5372 range more”. I expanded on this yesterday at 4pm when I wrote: “Price does like to sometimes “front run” these events in advance and its not uncommon to see a pre CPI/FOMC move. My lean is always just to defer to the trend. 5341-45 to 5372 remains the chop range. As long as that support holds, we can try those upside levels (5378, 5390, 5417). ES took this comment very literally, and we started this week by dipping to 5342ish yesterday, rallying to 5372, dipping back down to 5342ish this morning (failed breakdown) then rallying again back to 5378+ today.
Can bulls keep this going tomorrow? In today’s newsletter I’ll talk this, I’ll provide a complete guide for how I trade CPI and FOMC days. For new traders, tomorrow will be one of the easiest days of the year to blow an account, if you don’t carefully follow the instructions discussed below. Finally, I’ll discuss the actionable trade plan for tomorrow.