9 Green Days In A Row For SPX. Will Next Week Bring A Dip? May 5th Plan
The past week had been “Deja Vu” for the market. Everyday has been the same, and we closed off yesterday with an incredible 8 green days in a row, something ES has not done since August 2024. Today, it ran up the score even more with 9 green. For every action, comes an equal an opposite reaction and this was all the snap-back from the 930+ point sell we saw in a three day span in early August. Since the April 6th low at 4835, I have begun every single newsletter by reminding readers we are in what I’ve called buy dips mode, as a function of this snap back. For the past 9 days, this dip buying went into over-drive
I have kept a running total of these dips everyday since as they have varied in speed, depth, and duration, but all were promptly bought up, often in the same session: We had 430 point sell on April 9th, 375 point sell on April 10th, 130 point sell on April 11th, 233 point sell April 16th, and 56 point sell April 17th, last Monday a 177 point sell, last Wednesday a 141 point sell, last Friday a 67 point sell, Monday we had had a 88 point sell, Monday we had a 51 point sell, and Wednesday we had a 130 point sell. All were bought, with the Wednesday dip being bought with particular vigour, squeezing violently for 180 points into yesterdays high.
As I’ve discussed at length, there is an easy way to tell when and where a dips will be bought. All short squeezes and major legs up in ES are caused by my core setup: The Failed Breakdown and this is the footprint of institutional accumulation. Institutions buy by flushing a major low, trapping shorts, then squeezing. This was true for parabolic leg we saw on Wednesday and Thursday.
I wrote Tuesday at 4pm: “Failed Breakdowns of 5493 [Mondays low] would be of interest.” What did we do Wednesday morning? We lost 5493, ran to 5457, trapped shorts, and recovered to trigger long. That long paid us massively into today.
As readers know, I have had 1 major target since April 6th, which I’ve repeated nearly daily. I did so again on Tuesday, stating: “Next leg up targets 5600, 5620-23, 5650, then 5672 which remains the macro target (back-test of the red megaphone structure in the below chart that we trapped above and lost on April 2nd).” We saw precisely this, and by yesterday morning, we tagged that 5672 level, for an incredible 190 point rally from Wednesday’s 5493 long trigger.
Today, I was looking for that to clear, and as readers know I always defer to the trend. I wrote yesterday: “My general lean is always to defer to the trend until it ends. 5636 to 5658=a chop zone. Bulls want to accept the 5672 level, then next leg up targets 5684, 5699, 5711, then 5730-35.” We got to 5711+ this morning.
The air is getting thin here after 9 green. Can we see a dip? In today’s newsletter I’ll talk this, I’ll do a deep dive into two major Failed Breakdowns that triggered this squeeze from Wednesday, as there is plenty to learn from them. Finally, I’ll discuss the actionable trade plan for Monday.