Week of 1/14/2024 for SPX ES SPY

Time to breakout?

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RECAP:

In last week’s post we again discussed the importance of evaluating the first move made for the week. Testing lower first and rejecting those lower prices is, to me, more bullish than simply heading straight up. I would have preferred a cash hours test lower, but as it played out we tested lower overnight Sunday night into Monday morning, right into our long setup for the day and trended up from there in an enormous move. From the weekly plan looking for confirmation of a swing low with a test lower first:

The overnight session made it to 4715.25 for a higher low/partial retest, and the reclaim was a powerful setup indeed. From the daily plan for 1/8 (posted 1/7):

This trap took us directly to our “early week important inflection” of 4755.5-4758.5 and to sellers last line of 4771-4775. Once 4771-75 was broken (sellers last chance for a weekly false rally) it became support for the rest of the week and offered amazing dip buys:

Back in December I had proposed roughly 4745 to 4830 as a large balance range and we are still effectively trading that range with the one-day excursion to 4702. The move out of this range is unlikely to be small and should not be faded without confirmation of a failure. This week’s post we’ll cover what this breakout might look like and how we will trade it.