After 10 Days Of Rally, SPX Pulls Back. How Much Farther Do We Sell? Feb 1st Plan

Today, after rallying relentlessly since January 17th (we ran 210 points in a 10 trading day stretch) ES put in its first real dip. During this 10 trading day stretch prior to today, every single dip was systematically and rapidly bought, to the point where in the 10 trading days prior to today, ES only had 1 short instance where a 4hr red candle followed another 4 hour red candle with a lower low.

For the last two weeks of vertical upside, I have said the same thing daily. That ES gets a pullback only when a support fails, and today, we saw two major support cracks in the same session. I wrote yesterday: “Bear case tomorrow: For tomorrow 4925 failure would be a warning shot, with 4902 needing to fail to see any follow through”. This morning, we lost 4925, which took us down to 4902 where we bounced multiple times before and after FOMC. Then, after FOMC, we lost 4902, causing the next hard flush lower.

Today was a trappy, volatile, complex FOMC day as always, but after the dust has settled, we have put in the biggest red day since Jan 17th, and the first dip after 200 points of upside. Is this the start of more selling, or will it get bought up like the others? In today’s newsletter I’ll talk this, I’ll go over some of the A+ setups we got during today’s extreme volatility, and I’ll conclude by discussing the actionable trade plan for tomorrow.