Most Bearish Two Weeks Of The Year Are Almost Done For SPX. Now What? Sept 28th Plan
The market continues to track seasonals with extreme precision in SPX. Back on Monday September 18th, I wrote: “Today was a very muted session but with FOMC Wednesday and with this week being the most bearish stretch of the year seasonally, it is sure not to last”. This last two weeks of September are the worst of the year on average, and ES has taken this very literally selling virtually non stop from FOMC last Wednesday, until today’s low, as we near the end of the stretch.
Today, after a final flush lower, ES put in a violent relief bounce/short squeeze. I wrote yesterday: “The short squeeze risk is high now - and anyone with experience trading down-trends or bear markets knows how violent and sudden they are” and it came on queue in the afternoon. This process tracked nicely from yesterdays newsletter. I wrote yesterday: “If we rally straight back up there [4335] from here, one can likely take some points on the short side though on the initial backtest. perhaps even to a new low”. This is exactly what we saw this morning, and we ran to 4335, and then sold down for a final leg into a new low. Where did ES find its new low? Its no coincidence at all: At 4290 zone. This is the core rising trendline from October 2022s lows. This is “the” bull market trendline controlling the 1 year old bull market we are in.
Today, bulls tested and defended this key uptrend line and put in a bullish daily hammer candle. But is it enough? In todays newsletter I’ll talk what is next, break down in detail the setups that lead to the shorts yesterday and today, then provide the actionable trade plan for tomorrow.