SPX Is Coiled For A Major Move Anytime Now. What Way? Oct 9 plan
My newsletter sent out at 4pm yesterday was entitled: “Will Todays Dip In SPX Get Bought Like The Others”, and the answer was yes. Since September 20th, ES has been stuck in the same range. This range obviously has fuzzy borders and morphs like all ranges, but I have generally defined it as being 5805 to 5734/40. The support of this range has been so resilient that we have tested it and/or failed broke it down an incredible 15 times. I have for the last week, identified this range as a Bull Flag, writing yesterday: I wrote yesterday: “5734 to 5805 is a large consolidation, and this consolidation is a bull flag”
On Friday, we rallied up to range resistance at 5805 and to start this week, my lean was that ranges do what they usually do - fill out, - and this case, to the downside. I wrote on Friday at 4pm: “Generally, I see 5805 to 5740 as being a massive consolidation range from here (flag). This could very easily fill out more - even for days so do not be shocked if we retrace all the way to support again Monday”.
We saw exactly this yesterday as we flushed from 5805 down to 5740 by yesterdays close to retest range support. What happened from there overnight? No big shock, we flushed support of the range again, then worked back up the other way today. I wrote yesterday that my lean for the day was: “As long as 5734 and 5746 hold, we can work back up to 5760, 5773, then 5786-88. From there, possible dip then tackle flag resistance”. This played out to perfection today: At 630PM last night, we saw a quick Failed Breakdown below 5734, trapped shorts, then squeezed to 5805+ flag resistance by today’s close. This was a setup provided explicity to readers in yesterdays plan.
Ultimately though, ES is just waiting for CPI Day on Thursday. What way is the breakout likely to take us? In today’s newsletter I’ll this, I’ll do a deep dive into something we have not seen much of lately, my two short setup types: Back-test Shorts and breakdown shorts, which triggered yesterdays flush. Finally, I’ll discuss the actionable trade plan for tomorrow.