Is the SPX Rally Running Out of Steam? March 7th Plan

As discussed extensively both in Thursdays and Friday’s newsletter, ES put in a textbook bottoming pattern on Thursday, which triggered longs from ~3955. This bottoming pattern was of course the failed breakdown of the February low last Thursday where we flushed under the low, ran stops, then recovered. Nearly all swing tops and bottoms are set with this pattern.

This certainly followed through, leading to a 160 point, relentless squeeze to the upside. I wrote Friday “My loose lean for Monday is we can see some cool-off and backtesting (ideally, from no higher than 4060-65), before resumption to 4075, then 4105”. Bears only had about two points of cool-off from this 4060 level overnight before the squeeze continued to 4075-80 before finally selling late day.

After a 160 point squeeze, does this rally still have legs? In today’s newsletter, I’ll be answering this, talking some of the big picture structures worth watching, then provide the actionable trade plan for tomorrow.