SPX Snaps Its 8 Day Green Streak. More Red Ahead? June 21 Plan

My last newsletter was entitled: “A Rare 8 Green Days In A Row. Is That It?”. The answer, was yes. The fact we were 8 green days in a row illustrates just how exceptional this recent rally has been. While it has been exceptional, it also has been expected and the past couple weeks have been a masterclass in how simple, repetitive, price-based patterns and setups can both get us in, and keep us on the right side of the market until it ends. And today, it ended and we finally got a dip.

As readers know, I had been long for days, and on Monday morning, we exploded higher again, breaking out a multi-day bull flag. We then spent Tuesday cooling off, and its no surprise what pattern that “cool off” formed. I wrote on Tuesday at 4pm: “I My general lean is - as always - to defer to the trend. 5542-5560 is the new bull flag. We could fill it out, but as long as supports keep holding we can push to 5567, 5575, 5585-90.” This could not have played out better, and this morning, we rallied to 5585-90 (5588 high of day) final target, then began the pullback.

As I wrote yesterday, “Eventually, and probably very soon now, [a support] will fail, and we will correct lower sharply…nothing can go up forever”. Today, ES finally lost a support at 5560, triggering shorts, and putting in a red day. Is it a one off or sign of more to come? In today’s newsletter I’ll talk this, and I’ll discuss my approach to short in uptrends. Finally, I’ll talk the actionable trade plan for tomorrow.