SPX Is Basing For A Significant Move: November 21st Plan

NOTE: This is a re-send of the newsletter for tomorrow Monday November 21st for those who did not receive. The original was sent out on Friday evening

In yesterdays newsletter, I wrote: “OPEX is tomorrow. These days are notoriously tricky, and poor to trade, and have a tendency to see lots of movement to sometimes go nowhere. I will be trading small”. This was exactly the day on Friday, which spent nearly the entire day chopping around the 3955 level, before finally getting a late day push.

As always though - it is important to zoom out: Today wasn’t the only day of the week that was filled with chop and indecision. In fact, this week has now put in 5 candles in a row stacked by side, and ES is essentially at the same price it was Monday at 9:30AM. Traders know what this means. As every basic book on technical analysis states: Compression leads to expansion, and it means a trend move is coming.

It is interesting to note as well that next week (Thanksgiving week) is seasonally quite strong - green about 75% of the time, including in 2007 and 2008. In todays newsletter, I’ll be talking the broad pattern forming here, how I’m trading it, and risks/targets next week.