SPX Bulls (Barely) Cling Onto Support After A Historic Week of Volatility. What Now? Oct 17th Plan
Last week was a historic week in ES and many veteran 20+ year traders commented on rarely seeing anything quite like it. This is quantitatively true also, with Thursdays price action being in the top 5 largest intraday reversals at least since the debut of the SPY ETF. On Friday, ES continued with this historic volatility, following up Thursdays 225 point rally, with a 140 point sell. Where does all this leave us? In the exact same spot were last Monday morning.
Despite all this volatility, ES has been in a stalemate for 3 weeks, building a base above 3585. My lean has been the same all week and I wrote Wednesday: “My general lean remains unchanged, that after any any initial CPI trapping we get the 3700, 3730 test” where I was looking for a pullback and short. This played out very well, and we got to 3733 and sold off. I also wrote yesterday: “In this case, bulls will want to hold 3625 ideally on any dips, with 3585 being the extreme low, below which we sell hard.”
We held above 3585 but bulls are in a dangerous spot now, testing a support that has now tried 8 rallies that fizzled out this month. In today’s newsletter, I’ll be talking my core trading setup (and a great bearish version we had Friday, as well as the plan for trading Monday and path ahead next week.