SPX Has Been Coiling For *9 Days*. Can It End The Month With A Break? August 30 Plan
It was a barn-burner start to August: ES put in its biggest three day sell since September 2022 and it culminated on August 5th with a “Black Monday” crash that saw that the biggest sell since the Covid 2020 melt-down. This was capitulation, that resulted in a massive, bullish weekly hammer candle that same week. Its why I entitled my newsletter that week: “Bullish Weekly Hammer Candle In SPX. Can It Follow Through?”.
Since August 5th, bears have been paying for that bullish weekly hammer candle as ES has put in its most vicious rally cycle since the current bull market began in October 2022. Since the August 5th low, every dip has been bought. There was a 90 point dip last Thursday. It was Bought. There was a 90 point dip yesterday. It was Bought. There was another dip today, and its yet to be seen if this one is as well.
Zooming out though, we have spent the last 2 week building a large, sideways base generally from 5585 to 5655, with a 5630 mid-pivot/magnet. Yesterday, I sent out my newsletter early prior to Nvidia earnings at 2pm, and I wrote: “Generally though, we find ourselves at major multi-day support now at 5585-5595 and this has been the range support for over a week now. Bulls are going to want to hold this to keep the large week long flag structure in play. Obviously after Nvidia we could easily trap and recover. In general, the bull case would see ES recover the 5594 level and begin working up the range…This would fill out more back to 5615, 5630, then 5654”. Last evening, this played out perfectly and we flushed support of the flag, trapped, then recovered to trigger longs, hitting 5630 by the open this morning then 5654 by 11am. We overshot resistance, then filled it back out to the downside again.
We have now been consolidating in this range for 9 whole days and tomorrow is the final day of trading before a long weekend. Can ES leave the range? In today’s newsletter, I’ll talk this, I’ll go over the setup that triggered both yesterdays sell and today’s large rally (hint: The latter was a textbook example of my core setup, the failed breakdown, and this is essential to know as we see it daily). Finally, I’ll discuss the actionable trade plan for tomorrow.