Is SPX Charging Up For Yet Another Big Leg Higher? Jan 15/16 Plan

After an incredibly rare 9 green weeks in a row to wrap up 2023, ES started off 2024 with a red week. Like most dips in ES however, it did not last long. As I wrote daily for a week, the back-testing of the 4709 level last Friday (which was where we broke out from back on December 13th after the FOMC meeting) triggered longs and was “a passing of the baton moment from sell the bounce to buy the dip again” and this week, all dips were reliably bought, resuming the cycle of green weeks.

Ultimately, however, we have not gone far and since mid-December we have been consolidating in a large, multi-week bull flag roughly 100 points in size, with 4835 resistance and support low 4700s. 4835 has been a big a brick wall and we tested it again today. I wrote yesterday: “The ultra bull case tomorrow, would involve ES not even losing the 4802 level (or if it does, quickly spiking to 4791 then recovering). This would target a run to 4828-34 directly, perhaps 1 more dip, then breakout.” Today, we saw exactly this and overnight, we dipped to 4791, recovered 4802, then squeezed to 4834 this morning and dipped again.

One thing is brutally clear now: ES is building a base under 4835, and has been since mid-December. What do bases imply? A big move is coming. What way? In today’s newsletter I’ll talk this, I’ll then continue my ongoing series on my core setup: The failed breakdown, as this has been one of the most lucrative weeks for this setup in months with *7* in the past 5 days. I’ll finally discuss the trade plan for Mon/Tues.