How Much Farther Does This Rally in SPX Have? July 18th Plan
Last week was the steepest singular rally of 2023, going an incredible 4.5 days without a single 4hr candle closing below its prior candles low. The largest dip between Monday’s low and Friday’s peak was a 25 point mini-dip on Wednesday. As as a result of this - as readers recall - I had my longest consecutive long of 2023 buying last Sunday at 4420 entry provided. Due to the extreme steepness and low volatility of the trend, my trailing stop did not trigger until 4538 late Friday, for an incredible 118 point, 4.5 day rally. This is very rare.
Why did we get such abnormal strength? The same reason we always get extreme strength or weakness - a perfect classical chart pattern (3 week long ascending triangle) tested support at 4420 on Sunday, then broke out on Wednesday ~4485, as discussed and trading extensively all week. The strength of a move is proportional to the size of the structure breaking out, and a 3 week base will provoke an explosive, follow-up move, which we saw start the early phases of last week.
Today the dip was bought yet again as expected in the last newsletter, and my 4556 target from Friday hit. What is the target now? In today’s newsletter I’ll be talking the magnet for this leg, then I’ll be breaking down my trailing stop system, and providing the actionable trade plan for tomorrow.