Massive Squeeze For SPX. Bottoms In? Not Quite. May 5th Chart

For those newer to markets, today’s FOMC day certainly demonstrated why traders watch and hype up these days so much, and this one *certainly* delivered all the features that are usually associated with a FOMC day: The initially trappy moves right after the meeting, then the massive squeeze.

Fortunately, we were on the right side of it. Yesterday, I posted I was favoring that we ultimately resolve to the upside to 4255 as long as the 4155 level holds, and resolve to the upside we did, holding 4155 and squeezing 130+ points. As I wrote the past couple days, from a technical analysis perspective this move today was not shocking as it was preceded by a fairly common technical setup: Bullish daily hammer candle on Monday + failed breakdown of the February 2022 lows = squeeze, and we got it.

The question now of course becomes, how much more is left in this? To answer it, I’ll be talking about two clear chart patterns that have now developed and why they suggest this run has some legs before any new leg down. I will also discuss my philosophy around trading higher time frames and why the higher time frame view is so essential.