After 4 Red Weeks In A Row, Can SPX Try A Green Week? March 17 Plan
My newsletter yesterday was entitled: “SPX Is About To Put in 4 Red Weeks In A Row. Can Friday Reverse It?”. The answer for today, was yes. Prior to today, this was another week of carnage for ES, putting in 4 red weeks in a row for the 1st time since April 2022 (when we were at the start of a bear market). Most impressively, since February 19th, ES has been unable to put in two green days in a row. This selloff was sent into overdrive on Monday morning at 8am when ES lost its 4 month “megaphone pattern” which contained all price action since November, triggering the deepest sell on Monday since August 5th.
Today, bulls had a chance to try putting in another one of those rare green days. Remember that after deep sells, rallies in ES/short squeezes are always caused by my core setup: The Failed Breakdown. Every deep sell is followed by a Failed Breakdown which produces a bear trap/short squeeze. Yesterday at 2pm, we got another one where ES trapped below the Tuesday major low at 5533, flushed to 5512, then recovered it.
For this reason, I wrote at 4pm yesterday: “We have an active Failed Breakdown. My general lean is we can re-test 5558. If bulls can clear, we can work up the levels to 5584, 5599, 5658-60, then 5703-10. Level to level profit takes.” We saw exactly this last evening. By 7pm, ES tested 5558 exact, then recovered it and squeezed into today, hitting 5584 target, 5599 target, and coming about 10 points shy of 5658-60.
ES managed a rare green day, but can it follow it up with 2 for the first time since Feb 19th and morever, can it string that into a green week? Bulls have lots of work to do. In today’s newsletter I’ll talk this, I’ll do a deep dive into the Failed Breakdowns (my core setup) we saw yesterday to cause this rally today, provided to readers in advance. Finally, I’ll discuss the actionable trade plan for Monday.