SPX ES SPY Plan for 10/19

"It's so over" or "We're back!"

For the last two weeks now, we have been discussing the possibility of a weekly lower high forming specifically at ES 4419-24 or 4435-40. Two weeks in a row we have failed to break 4419-24 during cash hours with only a single brief overnight excursion above. We have been generally bullish for the week as long as we were above 4365-4369. Yesterday traded briefly above the 6 days balance high of 4419 (cash hours) and failed hard at 4423.25, leading to a full traverse of the 6 day (now 7 days) balance range.

Into today we had 2 potential low risk high reward setups, and levels to play otherwise in the absence of one of those setups. As neither setup presented, we defaulted to level-to-level play. We were bearish below 4383.75 but also careful about initiating new shorts too much lower as it was so near the 4365-4369 weekly range that had been bid all week. Indeed, there were a LOT of back and forth moves around this area that may have tripped up all but the best level to level traders.

Into the open price was holding our 4375.25-4378.5 range and held for the entire 30-minute opening range. Shortly afterward, there was a “look below and fail” of the opening range low that produced a massive move all the way above the opening range high to our 4392 level (4392.5 high of day). After this strong fail took price immediately all the way below 4375.25, 4375.25-4378.5 range capped the upside the rest of the day (after noon rally high of 4378.75). Our last downside target of 4351.5 was reached shortly thereafter and a massive short covering rally ensued. This was expected and is why it was today’s last downside target (it was this level that actually produced the 4378.75 afternoon rally high). ES ultimately trade another 20 points lower in the last 70 minutes after again losing the weekly 65-69 range (bearish for the week below). The question into tomorrow is, was that a trap and do we now get a look BELOW and fail of the recent (now 7 day) balance, or see direct continuation lower?