A Rare 3 Red Days For SPX - Is A 4th Incoming? August 4th Plan

As written yesterday, my Tuesday newsletter was entitled “Will August Be Bearish Seasonally?” and like clockwork as soon as the month changed, so did the “character” of ES. July - as readers recall - is the 2nd most bullish month of the year seasonally, green over 75% of the past 20 years and low volatility, dip buying was the theme with ES rallying +225 from low of month to high.

August kicked off with the inverse - volatility returning with large, volatile, bi-directional swings. It is important to note though that August is not a “bearish month” but rather a seasonally neutral month, +0.1% on avg of the last 20 years. This will be a month for tactical, unbiased level to level day traders with a system and on that front, it has been fantastic so far. I wrote yesterday: “If I had to provide a guess though, it would be we back-test 4553, perhaps sell to 4509-16, then rally from there” and this tracked perfectly overnight, as ES rallied to 4548, sold to 4510, then rallied hard off that level today.

After 3 red days, can the bounce sustain though or will it be sold again? In today’s newsletter I’ll talk this, then I’ll be breaking down some of the core setups I use to navigate these conditions (including enter shorts) as while as providing the actionable trade plan for tomorrow.