SPX Consolidates at *Major* Resistance. Move Incoming. January 18th Plan

In my last newsletter on Thursday, I wrote: “My loose lean is we can base build above 3960-70 which keeps a push to 4037-40, then 4055 in play”. On Friday, we tested 3960-70 (triggering the entry given in that newsletter) before rallying to 4035 today and rejecting. This run aside though, the past 3 days have ultimately been extreme, rangebound chop, mostly in the 4000-4020 zone.

The reason for the chop is no coincidence: After a full week of clean upside trend where ES rallied 200 points, it has now run into resistance of both its 200 day moving average, as well as its core bear market down-trend line from January 2022’s high. This rally put ES into massive resistance, while being overbought, requiring consolidation.

The question then becomes, now what? In today’s newsletter, I’ll be talking my principles for how to trade chop like today (including an example of my core trading setup), talking the big picture view, then discussing the actionable plan for tomorrow