Tomorrow Is The Final Major Catalyst Of 2023 For SPX: FOMC Day. Will The Rally End? Dec 13 Plan

Today was CPI day and readers will recall it was the last CPI day on November 14th that essentially “started” this move up with an explosive 100+ point rally on that very day, and since that day, it has been a full month of relentless “buy every dip” trading. The largest sell we had for the entire month was a single 50 point sell on December 1st.

Todays CPI continued the buy-dips tradition, and the dip after CPI was (as usual) bought. Before every CPI I discuss my “CPI strategy” which can be summarized as “trade the trap”. I wrote yesterday: “Rule 2 is expect traps. CPI, FOMC, NFP days often see trapping on the initial move after the report, and quite often, on the second and third move….For this reason, failed breakdowns are your best friend and you should wait for a trap first before you trade”. We saw this today, with an initial trap to the upside, then trap to the downside within the first hour. I added yesterday: “4668 is first down. On a normal day, this is a buy, for tomorrow though, its safer to wait for it to flush and reclaim” and at 945AM, we got this trigger for an excellent 32 point long and we flushed 4668, recovered it, then squeezed to 4700.

The problem though, is ES is not out of the woods yet and tomorrow we have the final major catalyst of 2023: FOMC. Will “buy the dip” continue to year end? In today’s newsletter I’ll talk, I’ll go over my FOMC trading strategy (more traps incoming), then discuss the actionable trade plan for tomorrow.