Its Been A Week Straight Of Upside For SPX. How Much More Is In The Tank? Feb 19 Plan
As discussed extensively last week, the last three weeks were carbon copies of one another: Each week opened up with a bearish gap down, and deep selloff on Sunday. Then - like 90% of selloffs in ES in an uptrend - those dips were bear traps and we got my core setup: The Failed Breakdown, the last three Sundays in a row shortly after the open leading to a rally that lasted until Friday.
I wrote last Friday February 7th at 4pm: “For Monday, bulls will want to hold 6016-20. This would allow ES to work back up to range resistance, starting with 6066-70 which is the 1st gateway, then 6093, then onto 6129.” What happened last week? We gapped down to 6016-20 exactly off last Sundays open, put in a large Failed Breakdown of the prior Wednesdays 6020 and longs were triggered for the week. I said we’d be heading to 6129 and where did we close last week? Essentially, right at 6129, for a 100 point long from last Sundays entry.
The fact that ES has done the same thing for three weeks in the row had the effect of “painting” on the chart a massive three week chart pattern, and this was a flag that ranged generally from 6020 to 6125, in particular for the last week. This broke out last Thursday/Friday.
I was looking for more some upside into Monday/Tuesday afterwards, and I wrote on Friday at 4pm: “The ultra bull case for Monday Tuesday is that ES can defend the three week flag breakout at 6116-20 that we saw yesterday. This would mean ES continues to flag out below 6138 or 6143, and above 6116-20 and today has formed a small flag/triangle. This would see 6154, 6168, then 6185-88.” ES got to 6154 exact this morning, before finally running out steam and dipping back to 6120.
Its been a week of straight upside. How much more is in the tank? In today’s newsletter I’ll talk this, I’ll do a deep dive into a massive Failed Breakdown we had on Thursday morning which propelled last Thursdays/Fridays rally (this was of the “complex” variety). Last week was a masterclass for Failed Breakdowns and we had at least one per day. Finally, I’ll discuss the actionable trade plan for tomorrow.