Is SPX Forming A Short-Term Bottom Here? October 6th Plan

Every day for the last week, I have talked about one single trendline in ES - the core bull market trendline from October 2022 in the low 4300 area and almost every significant move this week was related to this simple trendline - showing how powerful basic technicals are. We sold hard Tuesday on the failure of it, triggering a deep sell to 4235. I was then bullish yesterday, looking for a backtest of the trendline, and we rallied to 4304 high of day.

Yesterday, we closed right at resistance. I wrote yesterday: “Bull case tomorrow: We just hit a major resistance (quite literally the single biggest/strongest resistance available now in the low 4300s)”. Today, we saw a good initial ~50 point dip right off this major backtest. In the afternoon however, this dip was bought up aggressively by bulls. I concluded yesterdays newsletter by writing: “My general lean if I had to provide one is that ES can go for green day #2 tomorrow. This will likely start with a dip first though” and after putting in a good dip as expected off that major level to trap shorts, bulls returned to it late day, but came slightly shy of putting in that green day #2.

Today saw plenty of volatility to go nowhere as we ultimately base below a multi-month trendline. Can bulls finally break through tomorrow? In today’s newsletter I’ll talk this, go over the setup that originally got me long yesterday (back-test entry), then provide the actionable trade plan for tomorrow.