Is SPX Basing For Yet Another Leg Up? July 4th and 5th Plan

As readers recall, I got long on Thursday at 4420 (an entry provided in that newsletter) and this followed through with a massive, 75 point one day squeeze on Friday and one of the better trades of 2023. To be specific, Friday’s move was a 1.90 sigma move, which means one can expect moves of this magnitude on <3% of trading days annually. A very rare, unique occurrence.

Why did it happen? As discussed extensively all last week to prepare readers for the move, it happened for the same reason that every single large magnitude move happens, in all markets: Price formed a chart pattern (textbook bull flag from June 16-26th) and then broke out at 4420 on Thursday. After the squeeze, today was largely a cool-off day. I wrote Friday: “Now it is time to lay back and let price set up again. If I had to provide a coin toss though it would be ES can defend 4480-85 Monday, perhaps see 4502”. 4480 was the low of day.

What now? In today’s newsletter I’ll be answering this, and providing a comprehensive breakdown of the setup that produced Friday’s rally as it is a common setup, then I’ll be providing the actionable trade plan for Tuesday/Wednesday.