TL;DR
• The market just delivered its first notable SPX dip in a week, courtesy of the FOMC.
• This comes after a monumental +250 point rally, driven by a textbook symmetrical triangle breakout we discussed last week.
• Savvy traders navigated the FOMC "trap," buying the dip just as planned.
• Now, we ask: Was that dip just a blip, or does it signal more red ahead? We'll dive into what kept us long through this epic run and what's next for your trades.
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Quickfire Highlights
• Failed Breakdown Magic
Institutional accumulation showed its hand last Wednesday, kicking off the 250+ point rally from the 6690s.
• FOMC Trap Played Out
Today's FOMC delivered the warned trap; savvy traders bought the dip around 6901 and rode it higher into the close.
• All-Time Highs Reached
The SPX indeed hit new all-time highs this week, confirming the powerful momentum we anticipated after the triangle breakout.
We've been firmly entrenched in a trending up regime since last Wednesday, following the breakout of a massive bullish symmetrical triangle. This led to a significant, almost parabolic squeeze that pushed the SPX to all-time highs. Today, however, FOMC introduced a brief, sharp mean-reverting dip, marking the first real pullback in seven days. The market quickly absorbed this dip, showing resilience and a continued bullish appetite, especially into the close.
• Failed Breakdowns: This setup remains our bread and butter for identifying institutional accumulation. Last Wednesday, the sweep down to 6690 and subsequent recovery above 6694 was the critical entry signal, igniting the entire leg up and eventually the triangle breakout. Today, we saw a similar pattern during the FOMC volatility, with a sweep of the 6901 cluster and a strong reclaim, leading to an immediate squeeze. These are not random bounces; they are calculated moves.
• Symmetrical Triangle Breakout: The macro pattern, a bullish symmetrical triangle that had been building for weeks, finally broke its resistance at 6766. This classic technical setup provided the foundational momentum for the entire 250+ point rally, confirming the power of larger structural patterns when they resolve.
The market structure has firmly shifted bullish, especially after the sustained breakout above 6766. This level, once resistance, now acts as a significant long-term support. The recent journey saw us tagging targets like 6918, 6928, and 6942. The FOMC dip today tested a cluster of lows around 6901 and 6903. This area proved to be key immediate support. For the next session, maintaining price action above this 6901-6903 zone is paramount for bulls to maintain control. If it breaks, expect a retest of prior breakout levels or potentially a deeper pullback. On the upside, look for momentum to carry us towards the next targets, including 6959-62, which could bring new all-time highs.
The core principle remains: defer to the underlying trend, but stay vigilant for traps and opportunities at key levels. Today's FOMC action provided a classic "buy the dip" opportunity for those who waited for the setup.
For tomorrow, closely monitor the 6901-6903 support zone. If the market continues to consolidate above this area, or if we see another sweep and reclaim, it signals continued institutional interest and a likely push towards higher targets like 6959-62. Consider using trailing stops on any existing long positions; a disciplined exit strategy ensures you keep the gains from this impressive rally.
However, if bears manage to decisively break and hold below 6901, it could indicate a temporary shift in sentiment or a deeper retracement. In such a scenario, wait for clear failed breakdowns or strong reversals before re-engaging on the long side. For now, the structure remains constructive, but respect the levels. No trade is also a trade if conditions aren't clear.
Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before making investment decisions.