SPX Is Coiling Tighter and Tighter For A Big Move: January 5th Plan

In yesterday’s newsletter, I wrote: “My lean remains unchanged which is we can push back to 3870, 3895, 3920 as long as 3820 keeps holding”. As readers know I was long off 3820 yesterday and this played out nicely with ES pushing to 3870, 3895 before today’s FOMC minutes were released at 2pm, which triggered a sell off at resistance.

This narrative probably sounds familiar now though, because despite good intra-day, bi-directional volatility, ES is still stuck in the same 12 day, sideways, balanced range. A quick look at the daily chart reveals 12 candles stacked side by side, largely playing ping pong between 3820 and 3900 with some brief traps and below. This 12 days of chop formed a triangle pattern as readers know, which broke out yesterday, and back-tested today.

One thing is certain; a big move will come out of this. In today’s newsletter, I’ll discuss some interpretations of this multi-day pattern, talk how I traded today’s mess using my setups, and then talk the actionable plan for tomorrow.