Major Volatility To Go Nowhere in SPX; Is a Breakout Finally Close? August 11th Plan
Today, CPI delivered the volatility as fully expected, I wrote yesterday: “CPI and FOMC days are the most volatile, random, trap-filled, difficult to trade days of the year”…adding “Principle #2 of trading CPI is that the market often, but not always traps”. Today certainly delivered and we saw plenty of large, bi-directional swings and traps both ways (first up to 4520s, then down, then up to 4540, then down to 4475, then up). This was a very classic CPI day. Long-time readers know exactly how these work and how to trade them but for those who are new, today was a great education.
Despite this, ES followed yesterdays general trade plan well. I concluded yesterdays newsletter by writing: “My general lean would be that we would keep defending this 4493 support zone (4475 on any spikes down) then continue the rally to onto high 4530s”. Very specifically, I wrote: “On a regular day though, the 4538-40 zone remains a strong resistance. If ES were to dip, this is the spot” What happened today? We dipped to 4494 right after FOMC, squeezed to ~4540, then sold to that 4475.
As readers recall, this entire month for me has been about one single level: 4493-88, which tested *6x* just since last Friday, dipping below on several occasions all of which recovered. Today, we closed right there yet again. Will bulls defend it again to *finally* clear this range? In today’s newsletter, I’ll talk this, I’ll then break down today’s complex CPI trading, and provide the actionable trade plan for tomorrow.