SPX Consolidates For A Move, What Way? November 17th Plan

I concluded yesterdays newsletter by writing: “We have had a very clean, easy trend phase where moves followed through very nicely. There is a higher risk now of poor follow through, “higher cost of business” chop as per the green arrow below”. Chop it was and today was the 4th candle in a row stacked side by side.

After two weeks of nearly straight, lucrative uptrend - where ES pushed 345 points from the November 3rd low - the market is now firmly in basing mode, chopping up both longs and shorts and putting in an inside day today. As most traders know though - compression leads to expansion, and basing leads to trend. Like all bases - this one will resolve with another trend leg.

With ES just under its *critical* 200 day moving average at 4080, the question is, can it get there before running out of steam? In today’s newsletter, I’ll go over the two possible patterns I see building here, triggers for the sell-off/breakdown, and discuss trading horrible chop days.