A Rare Green Day For SPX - Dead Cat Bounce or Bottom? Oct 31st Plan
My last newsletter was entitled “Is SPX Getting Close to Capitulation?” and ES managed a 70 point relief rally from Friday’s lows. The recent selloff was without precedent this year - not only were the last three days in a row red, but before that the prior 5 days in a row were red, for the first time this year, making it a total of 8 of the last 9 days red.
Today, bulls managed to reverse it. I wrote in my last newsletter: “Bull case Monday: As I say everyday, there is no bull case until bulls reclaim a significant level to start one. For Monday, that should be 4147-54….. As always, targets are level to level - do not try to predict but this would be the shot for bulls to try to put in a green day”. This played out nicely, and after 3 days of relentless selling, 4147-54 reclaimed, and up we went for that green day. This level also acted precisely as support this morning, offering an additional long entry.
The question now is - can bulls manage green day #2, and perhaps more? This is something ES has been unable to do since October 11th. This time however, bulls have a major failed breakdown of the Thursday low behind them. In today’s newsletter I’ll talk this, go over the setup that lead to Friday’s melt down then today’s squeeze, then talk the actionable trade plan for tomorrow.