4 Big Red Days In A Row For SPX; Relief Bounce Incoming? Oct 23rd Plan
My newsletter was entitled: “Loss of 1 year support for SPX, Are Bears Back In Control”. The answer today was yes. This week was in many ways the polar opposite of last week. Last week - beginning Friday October 6th - we set a bottom at 4243 and rallied 187 points to last week high. In doing so, last week set the 1st green week for ES after an incredible 5 red weeks in a row. This week was the inverse and we gave back a large chunk of that rally, putting in another red week (making it 6 of the last 7 weeks red now).
What “caused” the bulk of this selling? We broke down a level I had talked about daily for months. The core bull market rising uptrend line, from October 2022 at 4330, and as a result of this we not only saw a deep flush yesterday (after tons of trapping), but more follow through for the majority of the day today. I wrote yesterday: “Bull case tomorrow: Bears control under 4330-35.” adding “we have lost a core support zone, which means that one should be cautious with directly bidding supports and in order for bulls to regain control, 4330-35 must reclaim”. Today, we grinded down slowly through supports all day, with a few minor relief pops.
We are now 4 red days in a row for ES, and closing at the lows. At the same time - RSI is nearly most oversold this year. Is there a relief bounce coming? In today’s newsletter I’ll talk this/triggers, go over the setups that lead to today’s selling, and break down the actionable trade plan for Monday.