SPX SPY ES for 7/11/24

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The full weekly plan and commentary should be reviewed ahead of this post.WEEKLY PLAN

For SPY 0.00%↑ we have been cautious initiating above a prior day high, but looking to buy dips within the prior day range. This has recently played out much like the rally early in the year where each day the dip was bought at our first downside level. Today was no different with the overnight low holding 5631 (again). Once again, buyers then had difficulty sustaining a bid above prior day high. Premarket looked above and failed and sold to 5640.5 shortly after the open. You may recall 5640 was the top of yesterday’s pre-market box. Buyers then drove through yesterday’s high just over 4 handles to our next level 5650 and again sold off. This is why we have been careful buying rips. Fortunately, this created the perfect long opportunity- the look below and fail of the IB low (1st 60 minutes low) - one of my favorite trades depending on context for the day.

We were looking for this long, and anyone short was encouraged to cover more at or just below the IB low. Price traded 1 tick below the IB low and never looked back, resolving 50 handles higher

Following the look below and fail, character for the day changed quite suddenly and a rather panicked bid came in. Naturally many jokes were made about CPI having been leaked. Whether or not that is the case, the buying was quite sloppy. It just as easily could have been FOMO for the POSSIBILITY (without knowledge) that CPI will be soft. Once above SPX 5600 there was really no reason to slow the move down as there have been no meaningful sellers in this tape except dealer flows and some minor profit taking. In the weekly plan I mentioned seeing the beginnings of capitulation buying. Today really looked that way.

We have CPI and jobless claims in the morning tomorrow. The market continues to be stretched rather long in the short term, but bulls (obviously) maintain full control. I truly have not seen a meaningful seller in quite some time. Even the (limited) selling in June was unimpressive.

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