How Much Farther Can This SPX Rally Go? June 6th Plan

As readers know, I got long on Thursday at 4193ish on the textbook failed breakdown setup and this has turned into an extraordinarily rare 110 point long and one of the larger trades of the year for me. As I wrote in my last newsletter, I have been managing this via my trailing stop methodology, and this 3 day trade finally trailing stopped me out today after a spike to 4304 1st target. I wrote in my last newsletter: “There will now be a hangover period for this move” and “It is the post-trend periods that are most costly, especially to newer traders, as they are highly trappy and complex” and that described today’s action well

The reason for this recent rally is no controversy or surprise for technical analysts: Last week we broke out the 4240 level, which had been the ceiling for ES since February. This level stopped the rally in February as well as twice in May, before exploding higher last week. While this is obviously bullish (and will remain so) we are now up 120+ points in two days, and pullback risk is now high.

In today’s newsletter, I’ll discuss this/triggers, talk my trailing stop methodology in great detail, then provide the actionable trade plan for Tuesday