FOMC Tomorrow. Will It Spoil The SPX Rally? Jan 29th Plan

This week started off with something I warned readers we are going to be seeing alot of in the coming years and likely, even more of this week: Headline driven collapses and we started this week with the largest flush since December 18th (which in itself was the largest red day of 2024). Of course though, there are often shorts that trigger before these big headline catalysts, or if not, shortly after

I wrote on Friday at 4pm: “We are in a very headline dominated market now, and Tape bombs means that ES can flush violently through multiple supports as it did on Monday evening this week.” I also wrote: “Bear case Monday: Bears finally lost a small support late day today at 6135, but have more work to do. On Monday, failure of 6115 now triggers the bear case.” Right off the open Sunday the bear case triggered, and down we went.

Readers know however that I am a Failed Breakdown trader. This means that whenever we get a sell like we had on Sunday - I am always eagerly awaiting for what always follows these type of elevator down selloff: The Short Squeeze, which is caused by my core setup: The Failed Breakdown. It didn’t take long to get one, and early yesterday morning we flushed the last Monday 5997 low down to 5940s, recovered, and longs were triggered as readers know.

My target for this was 6070ish, and I wrote at 4pm yesterday: “For now though, the bull case is that we got a short squeeze trigger on the Failed Breakdown of 5997 this morning at 8am, which triggered longs. The bull case ES can now begin back-testing with 6068-71 1st up. React there, then onto 6082, then 6115-20 to fill the gap”. We saw exactly this today: We rallied to 6071 overnight, dipped there to 6020s this morning,then worked to 6082 to 6100+ before the close.

Its been a great run, but now things get interesting: Tomorrow we have FOMC at 2pm, then a slate of big tech earnings at 4pm. This means buckle up for volatility (we all remember last FOMC day produced the biggest sell of 2024). However, they can easily do the same in the other direction. Whats the plan? In today’s newsletter I’ll talk this, I’ll go over the setup that triggered us long yesterday morning for this monster leg up (my core setup). Finally, I’ll discuss the actionable trade plan for tomorrow.