The Bottoming Setup Follows Through In Spx: How Far Can It Run? March 6th Plan

Note: This newsletter is for Monday, March 6th, and was originally written and sent out Friday evening. This is a re-send for those who did not receive.

Yesterdays (Thursdays) newsletter was entitled “Did SPX Put In A Bottoming Setup?”. As readers know, that setup was my core trading pattern and the one my entire strategy is built around: The Failed Breakdown. For Friday, the answer to that question was a resounding “yes” as we squeezed over 100 points from the 3950 level yesterday where longs were triggered.

I wrote Thursday evening that I was long into Friday’s session (with 4008 being the spot to add), and my lean was that we ultimately continue the rally to 4022, then 4035, and we got to 4035 today and beyond. As I have discussed all month, the location of yesterday’s reversal pattern was also important: Right at the 3950 zone which is the the backtest of the core bear market trendline from January 2022, which broke out this January.

Obviously a strong reversal pattern at major support is very bullish, but it is all clear for bulls? Not quite - in today’s newsletter, I’ll be talking some big picture risks here, diving into the setup that produced this rally, and the actionable trade plan for Monday.