8 Of The Last 9 days Red For SPX. More Coming? March 5 Plan

This week has been a masterclass for day traders with record volatility (and today was certainly the most volatile day at least since August 2024) and been mostly centered around one level/zone in ES: 5858 and 5875. We began the engagement of this level last Friday, and ES was in an unusual spot heading into last Friday: It had sold off for 6 days in a row, for the first time since April 2024. Remember that after elevator down selloffs, ES always sees a vicious counter-squeeze, and it usually comes on my core setup: The Failed Breakdown.

After 6 red days, heading into last Friday, I wrote on Thursday at 4pm that: “We are 6 red days in a row in ES and probably overdue for a bounce soon. Getting a bounce, and sustaining a bounce are two different matters though.” On Friday ES saw a violent Failed Breakdown below the 5858 shelf, flushing it by 10 points, recovering, and we rallied 130 points into Monday morning. This 5858 shelf was a major support all day Friday for 5+ touches, and also happened to roughly coincide with support of a multi-year bull market channel. As I warned though, getting a bounce is one thing, sustaining is another.

We hit 6000 Monday morning and began a deep flush, aided by more Tariff headlines. Heading into 7am this morning, what did ES do all night last night? It spent all night basing and bouncing - yet again - off that 5858 support shelf. I wrote yesterday: “Bear case tomorrow: Resumes under 5850.” First thing this morning, we lost this, shorts triggered, and we commenced a violent, 100+ point selloff down into today’s lows.

Deja Vu however. What happens a deep selloff? A short squeeze, and it should be no shock where we bounced too by the close today: 5858 then 5875 yet again. From there, we rejected. This means ES is now 8 of the last 9 days red. Is more incoming or can ES try to mix in another green day?

In today’s newsletter I’ll talk this, I’ll discuss the sequence of events that lead into yesterdays collapse (firstly a monster Failed Breakdown on Friday that rallied us 130 points, then a Breakdown Short yesterday that took us back down). Finally, I’ll discuss the actionable trade plan for tomorrow.