After 9 of last 11 Days Red, SPX Arrives At A Major Inflection Point. Can It Bounce? March 7 plan
My newsletter yesterday was entitled: “Rare Green Day For SPX, But Will It Get Sold Like The Others?”. The answer, was yes. As discussed at length, this week has been the most volatile and complex since the first week of August 2024, with 100 point bi-directional moves being the norm daily. This action is driven by clear external causes (Tariff Headlines) but the technicals as always gave us the broad structure that those Tariff headlines would bounce price around in.
All week though, bears had control and the reason for this was clear. I wrote back on Sunday (when we were 5960s) that the “Bear case Monday: The real bear case begins if 5870-75 fails.” 5875 is a major uptrend channel that began in October 2023, ran through the August 2024 lows, and contained all action since. We lost this line on Monday, and it ultimately triggered the deep collapse to 5740s low on Tuesday and started a cycle of sell all bounces. What did we then do on Tuesday? Remember after “elevator down” flushes, ES always short squeezes. On Tuesday, we short squeezed 130 points back to 5875 exactly to backtest that line, then flushed into yesterdays 5750 low. We can see here an obvious ceiling and bull/bear line forming, with bears controlling sub 5875, and bulls resuming above.
From here ES also started to form a range between 5870s and 5750-60s. After running to the top of the range yesterday, it should be no shock how we started today: Back down to range support. I wrote yesterday: “If we melt down to range support again, I’d be interested in a final long at 5757-63. Ideally something like tag 5757 and recover 5763 for this.” At around 9:45AM, we defended this zone exactly, and back up the range we went to 5822 by 11am, before flushing 100+ points to new lows.
I also stated yesterday that: “If the range fails, we take another huge leg down that would see 5726 minimum” and by 1:45AM we tagged 5726, then squeezed again.
Today, by tagging 5726, ES tested support of a multi-month “megaphone” pattern which we built since November last year. Can it try to set a low here? In today’s newsletter I’ll talk this, I’ll do a deep dive into the Failed Breakdown setup that took us +100 yesterday into today, and I’ll discuss the actionable trade plan for tomorrow.