Was Today Yet Another Bear Trap In SPX, To Setup Higher? December 5th Plan
As readers recall, we spent the entire last week of November ping ponging between 4550-55 and 4575-80, with all moves above the zone and all moves below the zone being traps. Finally though on Friday - after waiting and being positioned all week - ES broke out the zone with some real conviction and we squeezed to 4607-09 target. Friday’s euphoria, however, started off with what I like to call “the Monday hangover” and the move faded lower.
I wrote in my last newsletter: “My absolute least favorite spots to engage are after big, one directional trend days (especially on a Friday as we often get “hangover Mondays”)" and that was a certainly an apt way to describe todays price action as we sold off right back into that 4550-55 support zone, testing 4550-55 for (by my count), the *26th time* in the past few weeks. I also wrote on Friday: “For Monday, the obvious support to watch is the 4575 area. It was this zone that caused today’s breakout and therefore, it is this zone that needs to hold on any backtest to keep it in play” and we spent hours today glued around that zone, closing here. The dip was, again, bought.
Where does this leave us? We are ultimately stuck in the same 4550-80 zone, and we heading into a catalyst rich month, with futures roll next week, CPI, *and*, FOMC, ES is certainly not going to stay pinned here forever. In today’s newsletter, I’ll talk what pattern is forming here, go over in detail what “caused” the Friday squeeze (my core setup), then discuss the actionable trade plan for Tuesday