SPX Trade Plan — December 18, 2025
Morning Note — December 18, 2025
Light at the End of the Tunnel
Since December 3rd, we have talked about the high likelihood of consolidation in the markets before a leg higher. On December 10th (FOMC day), we noted that the Fed might not be the catalyst everyone was looking for, and rather we’d need to wait until this week to get “the move.”
That was slightly wrong, as the SPY has objectively broken down as of yesterday. Whether it’s a “fake breakdown” or not is TBD through the rest of this week. Something interesting to note: looking at the past two years, the third Wednesday of December has consistently been a big sell-off (shout out to @thediply for sharing that with me last year).
The Lunar Pivot On December 5th, we discussed the “Lunar Cycle Anomaly”—specifically how the Full Moon window correlates with distribution and sluggish returns. That thesis played out perfectly as we spent the last two weeks chopping and flushing.
But tomorrow marks the New Moon.
Historically, this phase flips the switch from distribution to accumulation. If you believe in the cycle (or just need a reason to be bullish), the timing aligns perfectly for a reversal into the Santa Rally. The sky is darkest before the dawn—literally and figuratively.
We remain cautiously optimistic in anticipation of a “fake breakdown” in SPY, but cautious is the key term. Until the market repairs some of the damage, it’s prudent to focus on risk management.
My focus is SPX 6764 and 6780. If we can close above 6780, the market has partially healed; through 6826, we are back to risk-on. However, I’d caution that the ideal structural move for SPX is a drop to 6618 before moving higher again.
Execution Levels
Long Plan
- Reclaim: Through 6764 sets up a move to 6780 with 6770, 6775 as interim levels.
- Continuation: Through 6780 sets up 6792 and 6800. Through 6807 targets 6814, 6819, 6826. Through 6826 we can see 6837 and finally 6850.
- Dip Buy: 6764, 6754, 6726. Or on a backtest of 6826 (if reclaimed).
Short Plan
- Breakdown: A break below 6764 sets up 6754, 6747, 6738–41, 6733, 6726.
- Flush: A break below 6726 sets up 6721, 6715, 6709, 6700.
- Extension: A break below 6700 sets up 6691, 6677, 6671. Below 6642 sets up 6618 and 6610.