6 Red Days In A Row For SPX. First Time Since April 2024. Bounce Incoming? Feb 28 Plan
This week has been unique for ES because heading into today, ES had put in 5 red days in a row, and not only was this the first 5 red day correction in 2025, but it was also the first of its kind since September 2024. Today, ES took it further, putting in 6 red for the first time since April 2024 (after which we rallied 700 points). The conditions for this selloff were provided 1 week ago and I wrote last Thursday at 4pm: “If 6123-6116 fails, 6098 is the absolute lowest bulls want to see, below which, we can collapse.” Collapse we did, first violently last Friday where we sold from open to close, then this week had been characterized by more routine sell the bounce mode.
As I discussed all last week, its not random when sells like we last Friday into this week occur: They occur when a major, well-tested, obvious, previously defended support shelf fails. This happened last Friday after defending 6123-6116 all last week and therefore, we sold. Simple, and no crystal ball needed. With this in mind, when do we see bounces? Bounces occur when ES puts in my core setup: A Failed Breakdown. This means flushes a major low, traps, and recovers. However, these bounces will typically be sold until ES can recover some of the zones that started the Breakdown.
We saw exactly this today. I wrote yesterday at 3pm: “However, if we can put in a Failed Breakdown of this afternoons 5945 low (perhaps touching 5944 or 5934) then recovering 5945, I’d consider a long on this.” This morning at 10am and we sold down to ~5934, recovered 5945 and squeezed to 5990s, before this bounce was sold.
I also wrote yesterday at 3pm: “There is also an advanced breakdown short available if the 5945 Failed Breakdown discussed above triggers then fails.” Around 2:15PM today, we got this, and flushed hard to 5800s.
After 6 red days in a row, is a bounce coming? In today’s newsletter I’ll talk this, I’ll do a deep dive into the Failed Breakdown (my core setup_ we had on Tuesday which caused the rally from 5924 to this weeks highs so far (6020s) as this set a good two day low and it was a powerful example of what I call a macro Failed Breakdown. Finally, I’ll discuss the actionable trade plan for tomorrow.