Tomorrow, The "Santa Rally" Is Supposed To Begin In SPX. Will It? Dec 22 Plan
Yesterday, after 9 green days in a row, ES finally put in its first sell signal in many weeks by losing 4810 support, triggering a rare short that resulted in a 60+ point flush down and - more importantly - the return of volatility and bi-directional trading after days days of relentless uptrend. For traders, this is good news, and it followed through today with multiple fantastic long and short setups.
As readers know, I covered my short and got long late day yesterday at 4740-45 for relief a bounce, writing in my 4pm newsletter yesterday: “I cut my 10% short runner right before the 4pm regular hours close. I have added a small long late day today at 4740-45 on the level mentioned below risking 25% of the days profits”. This played out very nicely and we set a low at 4744 yesterday and we began a choppy move higher that ultimately took us back to the mid 4790s. I concluded my newsletter yesterday by adding: “My general lean here is that as long as 4740-45 holds, we can bounce to do some backtesting (4767, 4788, 4810-12 if bulls are lucky)”. We got this, and are making our way to 4810-12.
Tomorrow is officially the first day of the infamous “Santa Rally”. Will bulls return, or have we transitioned from buy the dip to sell the bounce right before the holidays? In today’s newsletter I’ll talk this, I’ll then do a deep dive into yesterdays highly volatile day as it had - in one session - all three of my core setups. I’ll then discuss the trade plan for tomorrow.