SPX Is At A Major Inflection Point. What Way? June 26 Plan

As I will discuss today (and have already discussed for weeks) almost all the price action since early May has been entirely driven by a singular level: 5519. This was precise trendline resistance of a 3 month megaphone pattern and for May and into June, it was my macro upside target as I wrote here daily. Remember charting 101: Megaphones fill out, and we got to 5519 after CPI/FOMC June 12th. Last Monday, it broke out and rallied to 5580s.

I wrote last Wednesday: “5519: This was my target since early May as posted here daily, resistance of the upper lime green line in the below chart, which forms a massive megaphone pattern that encompasses all the action since February….Now, it is support”. We tested it Thursday to the tick, set the low of day. We tested it Sunday evening exactly again, rallied 40+ points. Then late yesterday as well as today, we flushed it and reclaimed, providing actionable failed breakdown entries. This level has been an absolute brick wall and we can see here just how powerful a simple line can be. You will not find this type of precision or timing by reading about the latest bond auction, studying the job numbers, or analyzing the last FOMC statement. Only technicals can provide it.

I concluded my newsletter yesterday at 4pm by writing: “If 5519-22 can reclaim, this late day move was a trap, and we resume up the levels”. We saw this reclaim both yesterday late evening and this afternoon, with bears consistently unable to hold below this level. Was that all for the recent pullback in SPX? In todays newsletter I’ll talk this, I’ll do a deep dive into my secondary setup type (the backtest) and how its been useful at this 5519 level. Finally, I’ll discuss the actionable trade plan for tomorrow.