We Are Coiling For Another Big Move In SPX. What Way? Jan 26 Plan
From last Wednesday until yesterday was quite the sequence in ES. We rallied 180 points for 6 days straight, and this rally was not a random occurrence, but rather the entirely expected consequence of ES breaking out of a perfect, 1 month long bullish inverse head and shoulders pattern on Friday at 4825. This is what multi-month breakouts look like.
Late day yesterday, we put in the first “proper” dip since last Wednesday, selling off 45 points late day that actually ended up resulting in the 1st red day in 5 days. This dip - no surprise - was a buy opportunity, and it was bought. I wrote yesterday at 4pm: “4891 is first down. I’d be willing to try catching some points here. Note: We are testing this as I am writing, so I am trying the long here”, adding “My general lean though is always to defer to the trend. As long as 4891, 4878 lowest holds, we can work back to 4925, and start building a base”. This is precisely what we saw today, and we held that 4891, rallied back to 4925 and spent all day building a base under it.
Are we charging up - yet again - for new highs? In today’s newsletter I’ll talk this/discuss the pattern forming here, I’ll go into the detail on the setup that caused yesterdays massive squeeze (its my core setup), and I’ll conclude by discussing the actionable trade plan for tomorrow.