Is The Relief Bounce In SPX Already Over? Oct 2nd Plan
This has been a good, and *very* volatile week for technical-based traders. Back on Wednesday morning, we got a short setup for a final leg down ,and where this leg down ended and the most recent relief rally began was right out of the technical analysis textbooks: ES tested its core bull market trendline from October 2022, tested its 200dma, and put in a bullish daily hammer candle all on the same day Wednesday. As a result, we got a good 90 point relief rally and the first proper “relief” bounce after 290 points of selling starting Mid-September.
I began warning about this relief rally risk back on Tuesday, and as readers recall, the above trendline test got me long at 4300, writing Wednesday afternoon: “I am holding my long runner still and will hold this as long as we are above 4290ish now - this could be a few day position if bulls cooperate”. We got excellent follow through on this into today’s high for a 70+ point move from entry, with adds en route.
Mid day today, we finally dipped again and returned to more “familiar” price action. I concluded yesterdays newsletter by writing: “My general lean is bulls can try a little higher. This would look something like base/correct more, then push up the levels to 4366, 4372, 4382, then dip again”. We managed to get to 4372 before beginning that dip. The question now is; was that relief bounce all bulls are getting? In todays newsletter, I’ll talk this, I’ll then go over my approach to using different time frames. Finally, I’ll discuss the actionable trade plan for Monday.