Week of 1/7/2024 for SPX ES SPY

Testing Higher First is Bearish? Again.GIF?

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RECAP:

In the Thursday 12/28 post (with ES in the 4830s) I outlined my detailed thought process that led me to become bearish. I led this commentary with the following:

I would definitely encourage subscribers to re-read this as we now had TWO more instances of this to end this most recent week. See the full post from 12/28 HERE.

That next day, Friday 12/29, we started to see the selling come. For last weekend’s weekly post I outlined the likeliness that we would test higher first from Friday’s close because of recent bullish context, and what it would look like if we became bearish. I suggested that retesting 4828.5 would be a perfect bearish retest to begin selling. After Friday’s extended hours close of 4812.75, ES gapped up for the Monday night Globex session, tested 4828 in the European session, and has been straight down since.

The Globex bearish retest below:

I had coupled a weekly swing short idea with this scenario, suggesting 4-5 points of risk entering as close to 4828.5 as possible for a “potential larger swing.” So far this swing achieved 126 points max range. From last week’s post:

For those that only trade cash hours it was certainly unfortunate that this bearish retest played out overnight. The next ideal entry would have been the bearish retest of the prior week’s lows 4796.75 from below. I posted in the discord (free for paid substack subscribers) that sellers would need to defend the spot. Once they did, I added it looked like a weekly “weak recovery high” and that it could get gross for bulls.

At the beginning of this commentary, I suggested that we have no had two more instances of “sometimes when you fully expect something to happen, and it doesn’t happen, it’s a good time to ask yourself why.”

I discussed the first instance of this in the 1/4 post for 1/5 trading, seen HERE

This week’s post will build this out further in the context of what should be expected next.