TL;DR
• The classic Thanksgiving week rally played out perfectly, delivering a massive 245-point run in the S&P 500 futures since Friday's low.
• This wasn't just seasonal luck. It was a textbook "elevator down, squeeze up" pattern, a powerful sequence we tracked step by step.
• Our plan to buy the reclaim of key levels after a failed breakdown worked flawlessly. Now we need to see if bulls have enough fuel for one last push.
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Quickfire Highlights
Holiday Liquidity Dries Up
Expect trading volume to thin out significantly, a condition that can lead to exaggerated price swings on low conviction.
VIX Remains Suppressed
The market's "fear gauge" is sitting comfortably low, signaling trader complacency, but this calm can reverse in an instant.
We are in a powerful, short-term uptrend. This price action is the direct result of a classic short squeeze. The market sold off hard late last week in an "elevator down" move, which aggressively trapped sellers. As we've discussed, moves like that never come for free. The cost for bears was a violent rally back up, as they were forced to cover their positions. The trigger was a picture-perfect failed breakdown, and since then, buyers have been in complete control, methodically taking out every resistance level.
The entire rally this week was built on one core setup, the Failed Breakdown and Level Reclaim. This is the sequence that ignites every major squeeze.
• The Initial Trigger: Last Friday, the market tested the 6543 support level. It briefly dipped, then aggressively reclaimed 6553. I noted this was the long trigger, and it kicked off the entire move. It was a clear signal that sellers had lost control and buyers were stepping in.
• The Continuation Play: Today, we saw a repeat. I wrote last night that we needed to hold 6701. The market flushed below it to 6675 during the morning session, trapping more sellers, then immediately reclaimed it. This provided the fuel for the next leg up to our 6780-85 target.
The structure is simple right now: bullish. Bulls are in control as long as they defend the prior day's key breakout levels. Every dip has been bought, and every prior resistance is now acting as support.
Here are the levels that matter now:
• Key Support Zone: 6780-85. This was today's target and is now the most critical level for bulls to defend. A hold here keeps the immediate trend intact.
• Pivot Support: 6701. This was the launchpad for today's rally. If we lose 6780-85, this is the next major line in the sand.
• Upside Targets: 6824 is the next logical resistance. Above that, the market could make a run toward the 6850 zone.
There is only one full trading day left this week, and liquidity will be light. My plan is to stick with the trend but remain nimble. The trend is up, so the primary bias is to look for buying opportunities.
My lean is straightforward. As long as the market holds above the 6780-85 support zone, the path of least resistance is higher toward 6824, and then potentially 6850.
If we see a dip into 6780-85 that gets bought up quickly, it could present a long opportunity. However, if sellers push price decisively below 6780, the bullish momentum is likely stalled. In that case, I would step aside and wait for a clearer setup to emerge, as the market could enter a period of chop. Given the holiday, if there is no clean setup, it's better to protect capital and sit on the sidelines.
Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before making investment decisions.