One Of The More Volatile Weeks Of The Year Likely Incoming For SPX. July 30 Plan

Last week on Wednesday ES saw a historic pullback, in that ES put in first greater than 2% red day in an incredible 357 days. This entire pullback (beginning last Tuesday until Thursday) was a substantial 285 points into Thursdays low. As I have discussed at length though - and as anyone who has ever traded a downtrend in ES knows) - pullbacks in ES always end in a bang, not a whimper; with a violent short squeeze. Legs down are never linear or smooth.

After such a substantial pullback right into major support ~5438 (to backtest the huge base where we broke out June 11th) I began looking for this bounce last Thursday at the close, writing: “My general lean today is similar to yesterday. As long as 5428 lowest holds (or quickly recovers), ES can try another relief pop to 5498-5500, then if bulls are motivated, 5528, 5546-52”. On Friday, we short squeezed nearly 100 points to 5528 exactly, then dipped.

Then into today, I was looking for continuation of this, writing at Fridays close: “The bull case Monday is that we head up and backtest 5550-55 from here. In a direct sense, this would mean that ES generally just keeps holding 5483 From here, we would just work up the levels to 5517-19, perhaps another dip, then squeeze on to 5550-55”. Today, we saw this exactly, dipping to 5483 this morning then pushing to 5519ish, which held as resistance most of the afternoon.

We now have one of the most catalyst-rich weeks in recent memory incoming with 4 major tech earnings, FOMC Wednesday, and jobs on Friday. Can this rally that began Thursday sustain? In today’s newsletter I’ll talk this, I’ll then do a deep dive into the setup from Thursday evening which triggered the 100 point relief rally we saw Friday/today (it is a variant of my core setup; the failed breakdown, and causes all short squeezes in downtrends). Finally, I’ll discuss the actionable trade plan for tomorrow.