[Re-Send] Nvidia Earnings Incoming For SPX. Expect Volatility. Can Bulls Keep The Run Going? August 28 Plan
Note: This is a resend of todays newsletter as Substack had some sending issues leading to emails getting dropped
Its the final week of August and as discussed all week, this is notoriously the lowest volume week, of the lowest volume month of the year. Price lived up to its average, but the consolidative/bullish action we saw for much of this week was not purely a seasonal phenomenon, but also had a strong technical basis. Readers know that ES alternates between two basic modes: Trend (I call this Mode 1) and consolidation (I call this Mode 2). ES spends 90% of its time in consolidation, which leads to trend.
Prior to trend moves, we can usually spot evidence of institutions accumulating on the chart. Remember institutions accumulate by flushing a low, trapping shorts, then squeezing. We saw this last Friday before the 130+ point squeeze. Last Friday morning around 2:30AM ES flushed hard to 6363 and in the dead of night, a massive institution took a long position. I wrote on Thursday at 4pm: “A Failed Breakdown of today’s 6370 daily low is always of interest.” I also wrote last Thursday at 4pm: “My general lean is to defer to the trend. 6407 to 6370= a tight range. As long as it holds (or quick trap below) ES can work higher to 6407, 6434, 6452, then 6461. This back-tests Tuesdays breakdown.” What did we see Friday? Exactly this. ES flushed under 6370 (this was the Thursday daily low) by 7 points, trapped shorts, then ripped violently to 6461, then onto 6494 to close Friday.
After this move, ES had spent since last Friday consolidating, building out yet another sideways range. This range mostly had support at 6461/6452 and resistance up at 6494. Monday evening, headlines flushed ES below this range down to 6430, and institutions were waiting there to accumulate. I wrote Monday at 4pm: “After a massive rally, ES is flagging out. The range is mostly 6461-6494 with a magnet at 6474 but this will expand and morph. My general lean is always to defer to the trend. Bulls want to recover 6461 to work up the range to 6474. When ready, the next leg up sees 6507, 6517, then 6536.” Monday evening, headlines rapidly trapped ES below 6461 and by 10:20AM yesterday morning, we were back to 6461 again, recovered and squeezed into the close.
Today, bulls would need to keep it going. My lean was they could. I wrote at the close yesterday: “My general lean is always to defer to the trend. 6494 to 6452= a range with 6474 pivots inside. We can fill it out, then breakout which targets 6507, 6518, then 6540. 6452 fails, we flush again.” Today we tagged 6474 exact this morning, and drifted to 6500+.
We have Nvidia earnings after the bell. Can bulls keep the run going? In today’s newsletter I’ll talk this, I’ll do a deep dive into the Failed Breakdown we saw last Friday that started this entire 130+ point squeeze cycle (this was the quintessential Failed Breakdown and was provided to readers in advance). Finally, I’ll talk the actionable plan for tomorrow.