Is The SPX Rally Finally Running Out Of Steam? July 9 Plan
Last Tuesday morning, I got long at 5506 (a setup provided explicitly to readers) for a fairly high quality failed breakdown. I wrote at the close on the Tuesday: “5519-5583= the chop zone and it forms a triangle, shown in red below. While we could ping pong this structure more, and there is an infinite number of pathways we could do so, as long as it remains in tact, the path of least resistance is up and it targets 5623+”. Right at the close on Friday, we tagged that 5623 target, for what evolved into a 120+ point long, the biggest this year.
As I said Friday, this move was a testatment to the power of simple technicals to cut through noise. Remember that technicals are not magic, they are a set of tools that tell us the only thing that matters: What institutions are doing. They move the market, we do not. As individual traders, it is not our job to have opinions on macro, the state of the economy etc. Why? Because nobody cares, we do not move the market. The only opinion that matters, is the opinion of those that do. Our job is just to follow. Last Tuesday, ES put in a classic failed breakdown (institutional accumulation footprint) in the context of a 2 week bullish triangle (macro institutional accumulation footprint). We followed, and rallied 120+ points.
I wrote in my newsletter Friday at 4pm: “I am still holding my 10% long from 5506 last Tuesday, which is enormously rare, as we simply have not had a trailing stop hit yet….In an “ultra bull case” we will not even lose 5611, and will just flag above there and below today’s highs. This would then target 5637, 5646, then 5670”. After testing 5611 exactly, we got a thrust to 5637, then began basing all day. Is this move finally running out of steam now? In today’s newsletter I’ll talk this, I’ll discuss my trailing stop methodology (which kept me long from Tuesday until today). Finally, I’ll discuss the actionable trade plan for tomorrow.