Monster Squeeze In SPX. Is The Bottom In? Not So Fast. Jan 9th Plan
2024 started off with something we had not seen since mid-October: 4 red days in a row, and the dip was - as has been the case for months - violently bought. As I’ve written about since mid-December, the fact ES set a low at ~4705 on Friday and rallied out is absolutely no coincidence. It was the result of the most fundamental, actionable feature of price action: The back-test. On December 13th after FOMC, we broke out that 4705ish level and started a multi-week melt up. After a breakout, its charting 101: The level back-tests, and then price rallies.
This triggered a massive long on Friday, and it continued into today. I concluded my newsletter on Friday by writing the following: “Bulls have tried today to put in the early stages of a recovery after 4 days of selling. My general lean is that as long as 4727 holds, bulls can try to push to 4757 again, dip then 4770-80”. This tracked nicely and after an overnight flush of 4727 that recovered by the open, we continued up nicely today and got to 4780, where ES so no interest whatsoever in stopping as the run continued into the close.
After 4 red days, we put in a big bullish reversal candle Friday, then classic follow through day today. Is more ahead? In today’s newsletter I’ll talk this, I’ll then do a deep-dive into the confluence of my two core setups that we got on Friday (an ultra-powerful setup that resulted in the current big leg up). I’ll then discuss the actionable trade plan for tomorrow.