Biggest Red Week For SPX Since March 2020. Can Bulls Relief Bounce Next Week? April 7 Plan
This week was one for the history books that is not being hyperbolic. Wednesday saw the biggest 2hr collapse since the March 2020 COVID melt down, Thursday also being the worst single day also since the 2020 collapse (and before that since the 2011 credit downgrade and the October 2008 Financial Crisis), and the rout continued into today. This week alone saw the large bearish weekly range since well before 2008 and even during the Covid Crash and Great Recession we did not see the 640+ point downside range we saw this week. These are one in 10 or 20 year market states, so if you traded it, you are living through a small piece of market history.
Things were looking fantastic though for ES heading into 4pm Wednesday (which seems like eons ago). As readers recall, on Wednesday morning a Failed Breakdown of the heavily tested 5620 level triggered long. I wrote on Tuesday at 4pm: “We are in a rally leg that began on Monday with the failed breakdown of 5565…We could fill this out in many different pathways but as long as 5620 holds, we continue up to 5695, 5720-25. Test there, and if that clears, the next squeeze leg begins to 5770, 5797+”. This long paid out for 150 points and right before 4pm on Wednesday, ES tagged 5770 and at this point all the technical ingredients were in place for a fairly sustained low, one that could have lasted for weeks.
However, no amount of technicals could save ES from what happened at 4pm on Wednesday and the market got hit with an unprecedented Tariff Black Swan Event. As traders, our job is not to psychically know in advance that these black swan style events are coming, but rather to know below what zones price is likely to unravel, so we can react. On Wednesday, that was the failure 5620 and I wrote on Wednesday at 2:45PM: “Bear case tomorrow: Begans under 5620…There is also an advanced short available under 5673.”
The Tariff shock took us under both those zones and we began a historic collapse that took ES down to 5428 by yesterdays close. I wrote yesterday at 4pm: “Bear case tomorrow: Bears control by default and next leg down begins under 5428.” and shortly after 4pm, we lost 5428, selling to 5377 overnight before a round of China retaliatory Tariffs took ES deeply lower down to 5090s by the close today.
Will we get a relief squeeze next week? In today's newsletter I'll talk this, I'll do a deep dive into Wednesdays and Thursdays historic price action as we saw excellent examples of two of my setups types: The Failed Breakdown, and the Breakdown Short. Finally, I'll discuss the actionable trade plan for Monday.