Has The Next Leg Higher In SPX Begun? Not So Fast. December 11th Plan
After Novembers 470+ point rally, ES has spent the last week two weeks (until today) in consolidation mode, forming a bullish megaphone pattern as I’ve posted all week. It’s been doing this for two reasons. Firstly, because this is what price almost always does after a large move (the larger the move, the longer the consolidation) and secondly, ES was awaiting catalysts. The first of which was NFP today 830AM, and it started us off another leg higher.
As always, NFP presented a fantastic buy opportunity and I wrote yesterday: “Keep an eye out for the usual trapping right after the release (the reaction move is often, but not always, a trap)”…concluding with my lean for the day being “As long as 4572 holds on any dips lower, ES can continue base building then attempt a push up the levels to 4597, 4609, 4620-25 targets”. After NFP we got exactly this with the standard trap move lower below 4572, recovery for the failed breakdown, then 35 point rally higher which got to 4609 second target.
This was a powerful example of my core setup - the failed breakdown. We now find ourselves closing at the highs with both FOMC *and* CPI next week, and at major resistance though. Big volatility incoming. In today’s newsletter I’ll talk targets, go into detail on the setup that caused the recent rally (its the only setup you need to know) then talk the actionable trade plan for Monday.