After 4 Red In A Row, SPX Puts In A Green Day. Another One Coming Tomorrow? September 26th Trade Plan
Last week concluded with the most significant selling we’ve seen since the the most recent leg of this now nearly 1 year old bull market (Oct 2022 bull market commencement) began in March. The technical reason for this selling was discussed extensively and fully expected: We broke down a triangle pattern that built all summer after FOMC last Wednesday at 4472, and from there, it was “elevator down”.
Specifically, we put in 4 red days in a row - a relatively rare occurrence. To top this off, last Thursdays candle was the largest red day since March 2023, a mere two days before we began the most recent 700+ point rally. What was the target for this selling? In my newsletter on Friday, I wrote the following: “4336 is the single most important support level below price right now, without close second.”, adding “This level is a very big, very important level, not only as a magnet for any further selling, but also as a point to try longs”. This played out fantastically well, and “magnet for further selling and spot to try longs” it was. We sold to 4338 low of day and rallied out 44 points to put in a green day.
Can bulls manage another one or is this yet another dead cat bounce? In today’s newsletter I’ll talk this, then I’ll breakdown the setup that led into today’s bounce. Finally, I’ll discuss the actionable trade plan for tomorrow.