Is SPX Finally Ready To Breakout? Not So Fast. Jan 19th Plan

Yesterday, my newsletter was entitled: “Will Today’s Dip Get Bought As Usual In SPX?” and the answer was yes. As I’ve written extensively, after starting the year off with 4 red days in a row, on Jan 5th ES saw a powerful bullish trigger: It back-tested the 4705 level we broke out back in December after FOMC, which formally ended the pullback and started a “buy the dip” regime.

Since then, every single dip in ES has been bought. As readers recall, I got long at the close yesterday, writing: “Around 330PM, I took the 4757-60 failed breakdown long ~4762” and this played out for a 40+ point overnight rally into this morning. I also wrote yesterday: “For tomorrow, the direct bull case is fairly straightforward: 4758-61 continues to defend (and ideally doesn’t even test again). From there, we retest 4782-85, perhaps try one more dip, accept the level, then rally again. 4802, 4813 would be targets”. We saw just this, and we rallied to 4785 overnight, spent hours today chopping around that zone, then pushed right to 4813 target in the last 10 minutes of regular trading.

Ultimately though, we have gone nowhere since mid-December as we are building a massive, 1 month consolidation (the largest since April 2023 which resulted in a 400+ point rally). Is ES ready to break it out? In today’s newsletter I’ll talk this, then I’ll do a deep dive into the “cause” of today’s squeeze (hint: Its my core setup and the cause of every squeeze). I’ll then discuss the actionable trade plan for tomorrow.