Melt-Down For SPX; Is A Big Relief Bounce Coming Next? September 18th plan
NOTE: This is a re-send of the newsletter for Monday September 18th, originally sent out on Friday for those who did not receive.
This week was a testament to just how powerful simple technical analysis is, and most importantly, the power of a single, solitary trendline. As readers know, I had been long all week with 1 single target in mind: 4565. I wrote back on Wednesday “My general lean is unchanged - as long as 4502 keeps holding, we can test 4540ish, perhaps final dip, then head up the levels to 4556 then 4565-70”. This week, 4566 was the high.
Was there a complex economic reason we sold at 4566? No - it was the simple trendline resistance of a multi-month triangle that I had been posting all week. I was looking for a pullback here, and we certainly got one. I wrote yesterday: “We are currently at a major resistance zone, with the RSI highly extended and the easy money is made on the long side” adding “For those longing, I would recommend small size as freefall risk is high” and freefall is certainly one word to describe today’s price action.
We have made the full round trip in ES from 4503 buy zone Wednesday, to 4565 target, and back down. The question is, now what? As nearly everyone has reported - the next two weeks are the most bearish of the year seasonally. In today’s newsletter, I’ll talk next week, break down my trailing stop methodology that kept me long from Wednesday until today, then provide the actionable trade plan for Monday