SPX Has Coiled For 3 Weeks. A Trend Leg Is Coming. Feb 13 Plan
As discussed in my last newsletter, ES has spent the last three weeks caught in a time warp: Each of the last 3 three weeks began, progressed, and are on track to end the same way. All three started with a gap down on Sunday, due to headlines over the week (usually, Tariffs). Then, shortly after the Sunday open each week, ES did what it almost always does after a deep, headline driven collapse: Put in my core setup, the Failed Breakdown. This triggered us long each week, including this Sunday.
In each of the last three weeks, this long then played out for a 100+ point move, lasting until Friday, where then ES sold off. I warned back on Friday at 4pm, that similar was coming this week, stating at that time: “For Monday, bulls will want to hold 6016-20. This would allow ES to work back up to range resistance, starting with 6066-70 which is the 1st gateway, then 6093, then onto 6129.” Right after Sundays open, we sold down to 6016-20 exact, then rallied to 6093 which was the rough high of day yesterday.
This three weeks of repetitive price action served to paint a massive consolidation on the price chart, which took the form of a flag which was mostly contained between 6020 to 6125. While the CPI’s are often random, the levels always remain precise. I wrote yesterday at 4pm: “Bulls took control on Sunday with a Failed Breakdown of 6020, and bulls will need to defend 6020 on any CPI dips tomorrow.” After CPI hit at 830AM, we sold to 6020 *exact* and rallied back to 6066-70 where we spent the rest of the day.
Despite all this though, we have gone nowhere for three weeks, spending it in the above mentioned range. Dips keep getting bought, but can it continue? In today’s newsletter I’ll talk this, I’ll do a deep dive into a series of Failed Breakdowns (my core setup) that we saw Sunday and yesterday which propelled the recent leg up. These were two different variants of my core setup, and they are both essential to know. Finally, I’ll discuss the actionable trade plan for tomorrow.