A Rare 3 Red Days In A Row For SPX; Bounce Incoming? Jan 4 Plan
It is incredible to state, but we are now 3 red days in a row in ES, and this would be the first time we’ve seen three consecutive red days since October 25th, certainly ringing in the new year with a change of character. Why have we finally seen some red days, after 2 months of essentially non-stop upside? As I have said everyday for weeks, traders don’t need to guess (or lose money) trying to pick when a local top is. It comes, when a support fails. We got this on Friday when we finally lost 4828 support. We back-tested it Sunday evening, and we’ve been in “sell bounces mode” since.
Today started off with the loss of another major support, something that was very rare for the last two months. I wrote yesterday: “If we lose 4767 tomorrow, we could see quite a substantial leg down. If this happens, I am not interested in longs until 4744/ 4736-38 zone where I’d be quite interested in longing”. We started today off right to the point, and saw exactly this: We cracked 4767, and got a substantial leg down into 4744-38, where we ended the day exactly.
After selling since Friday, are we ready for a bounce? In today’s newsletter, I’ll talk this, I’ll break down in deep detail the setup that caused the selling we got since the Sunday evening futures open this week. I’ll then talk the actionable trade plan for tomorrow.