Massive Breakout For SPX - Will FOMC Spoil The Party? Oct 31st Plan
Back on October 13th, I spoke about ES had put in a classic bottoming pattern (failed breakdown and recovery of the Oct 2nd low), to setup what I have been referring to all month as the “October rally”. October rally it was - and while there is still one trading day left, after Fridays extreme session ES is up over 8.5% on the month.
In my last newsletter on Thursday I wrote: “I am running my long now off 3765-75 as I indicated I would yesterday”. As readers know, my target for the next leg off this level was 3930 and I added “Clearing [3820] should mark a short-term low and begin the move back to 3850, then ultimately breakout to 3930”. This was an incredible session, putting in nearly 150 points from 3765 support and offering a clear Friday morning entry above 3820.
The technical reason for this rally is clear as readers know: We broke out a perfect inverse head and shoulders pattern last week, backtested it Thursday, then took off. Of course though, celebrations for bulls may be premature. Next week is a major FOMC meeting and a massive “pricing in” rally into it presents significant risk. In today’s newsletter, I’ll be talking whether this run has legs, and the actionable plan for a volatile upcoming week