Massive Short Squeeze In SPX. How Far Can It Run? October 9th Plan

Today, we finally got the much awaited bullish breakout in ES. I was bullish heading into today’s NFP day, writing yesterday: “My general lean though is that 4296-54 is a range to setup a move higher. This new leg should target 4320, 4336 then 4348 at least”. This played out extremely well, running over 100 points from the low of the day right to 4348 final target and beyond.

As always with data days though, this did not occur without some heavy trapping first. I wrote yesterday: “As usual, expect major trapping and volatility for the first half hour to one hour after the report. Quite often the first move is a trap before the “real move”. We certainly saw this today and the 1st move lower was a trap, spiking lower, putting in a big failed breakdown of yesterdays lows to trigger longs, then running to targets.

My newsletter yesterday was entitled “Is SPX Putting In A Short Term Bottom Here?” and today was certainly a good start. Most notable though, is that ES reclaimed its core bull market trendline from October 2022 at ~4308 today - the one that failed earlier this week - and reclaiming this was necessary to set a low. Can bulls follow through from here? In today’s newsletter, I’ll address this, breakdown the setup that caused today’s monster squeeze, then provide the actionable trade plan for Monday.