SPX Snaps Its Green Streak. More Pullback Ahead? Nov 12 Plan
We started this week with market history behind us, closing last week with the biggest green week of 2024, after the larget post-election rally in the history of the S&P 500. One thing I emphasize non-stop this newsletter is that 80% of good trading is just getting the trend right and understanding who “controls”. If you get the trend right, everything else just falls into place. Most trades with the trend will win, even if you botch the entry. As a result of this, readers know I don’t fight trend, and I remain dips buying mode *until supports fail to get me short*. In other words, respect the trend, until evidence comes in to trigger a counter-trend short.
This philosophy has kept me long during almost the entirety of this historic rally, and before todays pullback, the most recent proper multi-hour dip was last Wednesday morning down to 5902. I bought it as provided to readers and rode it into Friday morning, writing on Thursday at 4pm: “I am *still* holding my long runner from 5902 yesterday and these days are *exactly* why I hold runners on every trade…My general lean is always to defer to the trend. Bulls want to hold 6000, 5979 lowest tomorrow on dips. This would keep the parabolic move live, which would target 6016, then 6035-38”.
By Friday’s close, we got 6040 high of day, then pushed a little higher into this morning. I wrote Friday at 4pm: “There is little to say here. ES is stuck in a parabolic, lock-out rally, and there is nothing to do but ride it until it ends. It will be out of the blue when it does and we will get a pullback next week - (possibly Monday).” Today, ES put in its first dip and red day since Wednesday morning.
It was a small red day, but a red one nonetheless. Was today’s pullback a one-off, or more ahead? In today’s newsletter I’ll talk this, I’ll discuss in further detail two components that are important to my trend following approach: My trailing stop methodology, and my approach to shorting (this is review for longer-term readers). Finally, I’ll discuss the actionable trade plan for tomorrow.