SPX Is Coiled Tight For A Move. Breakout? Or Breakdown? Sept 26 Plan
In yesterdays newsletter, I spoke at length about how markets are an elaborate machine to trap traders both intraday (via constant liquidity grabs and failed breaks) and a broader scale as well by constantly behaving contrary to consensus expectations. As discussed yesterday, September began with endless commentary about “bearish seasonality” and what ES did after an initial large bear trap to start the month is rally an incredible 330+ points with only 3 red days since September 10th (if you count today).
Readers were fortunately very well prepared for this and I warned way back on September 6th 4pm (right at 5455 lows): “Obviously a short squeeze is around the corner”, and “Remember that when ES short squeezes - it is violent. We could recover this entire selloff in a day or two easily if ES really wants, just like we did at August lows”. In the following days thereafter, we retraced all the first week of September selloff back to 5730. Next, came all time highs. I wrote last Wednesday 4pm: “As long as 5680-85 keeps holding we can simply continue building out the base we have spent the last several days in. As long as this range is in tact though, it targets AThs directly. 5775, then ultimately new ATHs to 5797+ are in play”.
Last Thursday, we tagged 5797 exact and this was the high from last Thursday until today and we spent the last 4 days coiling up in a tight base after. I warned about this basing extensively since Friday, writing yesterday: “We now have a highly complex, mature base formed, with “bases within bases”. On a short-term basis, 5791 to 5769-71 is the ultra tight base. On a broader level, the entire consolidation is roughly 5791 to 5739”. This morning, we popped above this base, then sold back to 5769-71, which was precisely support for 3hrs this afternoon.
We have been coiled extremely tightly now for 4 full days now, in this exact range. The move will be explosive when it comes. In today’s newsletter I’ll talk how to trade it, I’ll do a deep dive into a very important distinction that readers need to know between my core setup (the failed breakdown) and its sibling (the level reclaim). It is subtle, but important. Finally, I’ll discuss the actionable trade plan for tomorrow.