2024 Starts Off Red For SPX, Sign Of Things To Come? Jan 3rd Plan

We started the 2024 year on the coattails one of the most impressive rallies in years, green 9 weeks in a row and green 14 of the last 16 days - and the streak ended Friday. My final newsletter of 2023 on Friday was entitled: “2023 Closes With A Red Day For SPX. Will Bears Get More Next Week?” and the answer was yes, at least to start. Readers recall that for the last 3 weeks, I have repeated the same thing every single day: That ES gets a sell only when a support fails. On Friday we got a support failure when 4828 failed, flushed to 4790s, back-tested overnight last night, then sold again today, before a late day run up.

I concluded my last newsletter by writing: “Volatility is back on Tuesday. Bears did lose a support today at 4828, and this is ingredient #1 if some sort of sustained selling is to occur. But it is merely an early sign of weakness, with no further confirmation yet. My general lean is therefore as always: To defer to the trend. This means for Tuesday, my lean would be that we backtest the 4828 level that caused the breakdown today, dip, then try for further upside”. Overnight, we saw exactly this, rallying to 4828, hitting it to the exact tick, then flushing 50+ points before putting in several rally attempts, including one late day.

Bulls have been attempting to buy the dip all day today as always, but have struggled. Will they drop the ball this time? In today’s newsletter I’ll talk this, I’ll then break down in detail the fantastic short setup we had on Friday as it conforms to the rarest and highest R/R of my three trading setups. I’ll then discuss the actionable trade plan for tomorrow.