Was That It For The Pullback in SPX? Jan 12th Plan
“Buy the Dip” has been the theme of the week in ES, and CPI didn’t disrupt it today. Longs paid out heavily this week with a 130 point rally in ES - and as I have re-iterated daily, I had one single big target for this: 4835. Why was this the target? Basic technical analysis as always has an answer to this one: Since Mid-December, ES has been constructing a perfect flag pattern with low 4700s support and 4835 resistance. Flags fill out by their nature and Today/last night, we finally tagged that 4835 target.
I wrote yesterday: “As long as 4808, 4787 lowest holds on CPI spikes, we can finally tag that 4835 level. If bears are going to step in, it has to be there before we start the formal breakout leg.” CPI today delivered the standard volatility and extreme trapping, but we saw exactly this right after CPI and step in bears did; We tagged that 4835, sold off after CPI to 4808-02, then ran back to low 4830s again, before rejecting hard 60 points, which was then bought. As always - no complex understanding of macroeconomics nor fancy indicators were required to derive this 4835 level and focusing on the former only obfuscates the simple technical structures that are ultimately driving price. It is a simple flag resistance than anybody who can draw a line can derive.
Like every dip for the past week though, this one was bought and we closed not far from where we opened. Was that two hour dip all bears are getting? In today’s newsletter I’ll talk this, I’ll do a further deep dive into the 4+ actionable failed breakdown setups we’ve had this week as its been one of the most optimal weeks for this setup in a long time (my core setup). I’ll then talk the actionable trade plan for Friday