Biggest Two Day Red Day Stretch In SPX Since April 15. Relief Bounce Coming? July 19 Plan
Yesterday and today were certainly a departure from the norm, with ES putting in largest red day since May 23rd yesterday, and following it up into today for the biggest two day red streak since April. This sell was caused by the same thing that causes every sell in ES: Sells happen when and only when a major, priorly defended support fails. Not a minute before, and we got that originally Monday overnight. I wrote Monday 4pm: “Bear case tomorrow:…There is also a breakdown short on the failure of 5694 available. Same thing here, and I’d need to see it accepted first, then a 5689 trigger”. The trigger hit, and down we went for 50 points. What this did was formally put bears back into control as written yesterday.
We never need to guess when a sell will occur or play the top picking game, we just react short when supports fail. This selloff took us back to 5630 yesterday/overnight which was ground zero. I wrote yesterday: “I see bears as being in control until proven otherwise, this is something I warned every hour today on Twitter. What does this mean in practice? It means longs all have a significantly higher chance of failing and it means sell bounces is the tendency”. We got one of those bounces overnight and into today off the 5630 level into the 5660s. Then what it happened? It was sold.
I wrote yesterday: “Bear case tomorrow: Begins short term on the fail of 5630”. After an overnight bounce, we lost 5630 mid-day today, and began another violent leg lower into the 5570s. My newsletter yesterday was entitled: “The Biggest Red Day For SPX In 2 Months. More To Come?”. There certainly was. Will it continue? In today’s newsletter I’ll talk this, I’ll discuss my rarest setup (the breakdown short which caused the recent selling). Finally, I’ll talk the actionable trade plan for tomorrow.