After 4 Green Days In A Row, Is "Buy The Dip" Here To Stay? Not So Fast. April 28 Plan

Yesterday ES did something that it had not done once yet in the month of April: Put in three green days in a row, and today, it followed it up with 4. This is not shocking however, because since April 6th (which is when ES set its most recent low at 4835), ES had been in what I’ve called “buy dips mode”. Some of the dips have been massive: We had 430 point sell on April 9th, 375 point sell on April 10th, 130 point sell on April 11th, 233 point sell last Wednesday, and 56 point sell last Thursday and Monday a 177 point sell. However, unlike in February and March, these dips were all bought up to prevent ES from revisiting those lows.

Buy dips is a common expression in finance, but the real question is always: Where? The answer is provided by my system. All major short squeezes in ES are caused by Failed Breakdowns, which in turn, occur after deep, “scary” legs lower. We had such a leg down on Monday where we sold the entire session. Monday afternoon however, ES put in a monster Failed Breakdown of the 5155 level which was a 1.5 week low set April 10th. This got us long, and its why I wrote on Monday at 4pm (when we were 5160s): “My general lean is ES can try to backtest 5231, then 5248-52…. Once 5248-52 clears, ES can head significantly higher to 5315 then 5377+.” By Tuesday at 6pm we cleared 5377, then spent Wednesday basing above there.

Then yesterday, another Failed Breakdown would take us for another leg up. In this case, we spent Tuesday evening and Wednesday building a shelf at 5377/87. Early Thursday morning, we flushed it by 20 points and recovered (Failed Breakdown). I wrote on Wednesday at 4pm that: “My general lean is we can fill out the 5377/87 to 5475 range more. Breakout of this would target 5515, 5529+.”

Yesterday afternoon, we hit 5515 exact, which was the high of day. The question for today would be, can bulls keep the momentum going? My guess was yes, and I wrote yesterday: “My general lean is to defer to the trend. Bulls want to retrace some of this sell to the supports mentioned above [5493 was 1st down]. Next leg up sees 5515, 5532, then 5565-75.” This morning we dipped to 5493, got the long trigger, and ran up the targets

Dips were bought all week in ES. Is “buy the dip” back for good? There are some big overhead resistances still. In today’s newsletter I’ll talk this, I’ll do a deep dive into 1) Some of the quality long setups we had on yesterday at 5377 (including the Failed Breakdown that triggered the long that lasted into today and 2) I’ll talk how I trail my stops and use runners. Finally, I’ll discuss the actionable plan for Monday.