After Major Breakout, SPX Consolidates For Its Next Move, What Way? Jan 25th Plan

As written, yesterday was a technically extremely significant day for ES. This was for two reasons: Firstly, it broke out of its core downtrend line from January 2022 (which by now everyone noted) and in addition, it also cleared its 200 day MA. This would be its 5th attempt to clear its 200 day MA since the bear market started.

After a 160+ point breakout rally though, a trappy, poor follow through chop day was expected today, and we certainly got one. I wrote yesterday: “We are at a higher risk of consolidation/basing tomorrow. Mode 2, poor follow through action.” Despite the consolidation though, ES bulls did what they had to do today, namely defended yesterdays breakout points on the back-test by holding above the 4020 & 4k levels that triggered yesterdays squeeze.

The question is, now what? In today’s newsletter, I’ll talk the broader pattern here, how I traded today’s messy conditions via yesterdays plan (the good, the bad, and the ugly), talk the big picture view/targets, then provide the actionable trade plan for tomorrow